The International Energy Agency has lowered its forecast of worldwide oil demand by 60,000 b/d for 2011 to average 89.5 million b/d and raised its 2012 outlook by 70,000 b/d.
Adjustments to this year’s forecast stem largely from lower-than-expected demand in the second and third quarters, which has been pressured by high prices and increased evidence of slowing economic growth, the agency reported in its Oil Market Report for August.
Weaker demand in the US and China drove the adjustment. China’s monthly apparent demand contracted by 1.5% in June from a year earlier, as refinery runs eased and gas oil posted a sharp slowdown in demand growth.
IEA also revised downward its estimate of 2010 demand by 50,000 b/d to 88.3 million b/d such that global oil demand growth for this year is about 1.2 million b/d, unchanged from its previous report.
The new, stronger outlook for 2012 is due to higher expectations for oil-fired power generation in Japan, which will push global oil demand to an annual average of 91.1 million b/d.
IEA concedes that its forecast is based on International Monetary Fund assumptions of global economic growth of 4.2% in 2011 and 4.4% in 2012 and that these assumptions may ultimately prove too optimistic.
Employing an assumption of 2.8% economic growth in 2011, IEA sees worldwide oil demand averaging 89.1 million b/d this year. And assuming 3% economic growth in 2012 yields an average oil demand forecast of 89.8 million b/d, the agency reported.
Such an outcome could conceivably push the ‘call on OPEC crude and stock change’ below 30 million b/d, all other things being equal, IEA said.
Oil supply from the Organization of Petroleum Exporting Countries climbed 115,000 b/d in July to 30.05 million b/d, largely due to Saudi Arabia’s effort to replace lost Libyan supplies.
IEA noted that Saudi Arabia boosted its production in July to a 30-year high of 9.8 million b/d, and a sharp uptick in output by Angola helped offset declines in Iran, Iraq, Ecuador, Nigeria, and Libya.
Non-OPEC oil supply increased by 400,000 b/d in July to average 52.7 million b/d. Production in the second half of this year will likely climb 1 million b/d higher than in the first half, IEA said, as temporary shut-ins recede—notably in Yemen, UK, and Canada—and as new fields come on stream in Brazil, Canada, and Australia.
The agency forecasts that 2012 non-OPEC supply will average 54 million b/d, a 100,000 b/d downward revision from its previous outlook, compared to last year’s 53 million b/d. IEA expects incremental supply next year from Brazil, Canada, Australia, the former Soviet Union, China, and global biofuels.
In contrast to previous years, oil production among European members of the Organization for Economic Cooperation and Development could stay flat year-on-year, as North Sea production experiences a minor uptick with a handful of new fields coming online, the report said.