IEA cuts 2012 oil demand outlook

By OGJ editors

Global oil demand in 2012 is expected to grow by 800,000 b/d from 2011, down from last month’s outlook for 1.1 million b/d of demand growth, according to the latest monthly oil market report from the International Energy Agency.

The report follows this month’s outlook from the Organization of Petroleum Exporting Countries, which cut its 2012 forecast of worldwide oil demand by 120,000 b/d to 900,000 b/d of growth from 2011.

The Paris-based IEA now expects demand to average 89.9 million b/d this year, as the International Monetary Fund cut its forecast of the economic growth rate that underpins the worldwide oil demand outlook to 3.3% from the 4% outlook that had been assumed since September 2011. The IMF expects a contraction in 2012 economic activity in the Euro zone countries.

IEA still sees robust oil demand growth of 1.2 million b/d in the developing countries outside the Organization for Economic Cooperation and Development (OECD)—although this compares to last month’s outlook for 1.4 million b/d of growth. And the agency expects OECD demand to average 45.25 million b/d this year, down from a 2011 average of 45.64 million b/d, as sliding gasoline demand accounts for more than 40% of this decline.

US demand is forecast to average 18.8 million b/d, down from last year’s 18.89 million b/d, while Canadian demand is seen slipping to 2.21 million b/d from 2.23 million b/d.

Oil demand in China this year is forecast to climb to 9.89 million b/d from last year’s average of 9.51 million b/d, curtailed a bit due to weaker economic growth of 8.2% this year vs. a previous outlook of 9%.

Outside the OECD, IEA says, the industrially important gasoil market will provide 400,000 b/d of the projected gain in oil demand for 2012, as economic growth in these emerging and developing countries averages 5.4%.

OECD oil supply for 2012, forecast to average 19.4 million b/d, is up marginally from IEA’s previous report, with a higher expectation for US production and a small decrease in the outlook for Canadian output. Non-OECD oil production is forecast to average 30 million b/d, up from the 2011 average of 29.8 million b/d. Processing gains and biofuels will add another 4.2 million b/d to this year’s oil supply.

The ‘call on OPEC crude and stock change’ is reduced by 100,000 b/d for both the first half of 2012 and the year as a whole. At 29.9 million b/d, the 2012 ‘call’ is 700,000 b/d below the 2011 average due to a combination of higher non‐OPEC supply and OPEC NGLs, which the agency forecasts will average 6.3 million b/d this year vs. last year’s 5.8 million b/d. IEA estimates that OPEC’s effective spare capacity is 2.82 million b/d, largely unchanged from last month.

IEA said that in addition to supply and demand, the widening of Brent crude oil’s premium to West Texas Intermediate plus midstream and downstream developments are key to explaining oil price dynamics.

There are multiple factors behind the renewed widening in the price differential, recently about $19/bbl, and a shortage of pipeline capacity to move crude to US Gulf Coast refineries from the Midwest is central to the issue.

“An added twist is the deferral of the Keystone XL pipeline project, even though that decision will arguably prompt development of alternative routes to the US Gulf or, longer term, push Canadian crude towards the Pacific Coast. In a global context, strong relative Brent prices would normally confine Atlantic Basin crudes within the region. However, Japanese power sector oil demand, after nuclear capacity shutdowns, is strengthening Asian fuel oil prices, and so too heavier Middle East crude prices. An arbitrage for Brent‐linked African crudes into Asia has therefore opened,” IEA said.

IEA also noted that incremental midstream demand, for example, to fill new strategic storage capacity in China, could pull upwards of 200,000 b/d of extra crude into Asian markets, over and above rising regional products demand and refinery runs.

Also, the apparent paradox of weakening European 2012 oil demand but strengthening refining margins looks less puzzling when recent refinery rationalization is taken into account, IEA said. A spate of actual and threatened closures—from Petroplus plants in Europe through to major export‐oriented units in the Caribbean plus a late‐winter freeze in Europe and Asia—have driven products cracks sharply higher, despite an increasingly gloomy economic picture.

Related Articles

PHMSA proposes pipeline accident notification regulations

07/02/2015 The US Pipeline and Hazardous Materials Safety Administration has proposed new federal oil and gas pipeline accident and notification regulations. ...

FourPoint Energy to acquire Anadarko basin assets from Chesapeake

07/02/2015 FourPoint Energy LLC, a privately owned Denver company, plans to acquire oil and gas assets from Chesapeake Energy Corp. subsidiaries Chesapeake Ex...

Puma Energy completes purchase of Murco’s UK refinery, terminals

07/02/2015 Singapore-based Puma Energy Group Pte. has completed its purchase of UK midstream and downstream assets from Murco Petroleum Ltd., a subsidiary of ...

BP to settle federal, state Deepwater Horizon claims for $18.7 billion

07/02/2015 BP Exploration & Production Inc. has agreed in principle to settle all federal and state claims arising from the 2010 Deepwater Horizon inciden...

MARKET WATCH: NYMEX oil prices plummet on crude inventory build, Iran deadline extension

07/02/2015 Oil prices plummeted more than $2/bbl July 1 to settle at a 2-month low on the New York market after a weekly government report showed the first ri...

API to issue recommended practice to address pipeline safety

07/01/2015 The American Petroleum Institute expects to issue a new recommended practice in another few weeks that addresses pipeline safety issues, but the tr...

Shell Midstream Partners takes interest in Poseidon oil pipeline

07/01/2015 Shell Midstream Partners LP has completed its acquisition of 36% equity interest in Poseidon Oil Pipeline Co. LLC from Equilon Enterprises LLC, a s...

MARKET WATCH: Oil prices decline as US crude inventories post first gain in 9 weeks

07/01/2015 Oil prices on July 1 surrendered much of their gains from the day before after the release of a government report showing the first rise in US crud...

FWS issues Shell letter of authorization on Chukchi Sea lease

07/01/2015 The US Fish & Wildlife Service issued Shell Gulf of Mexico Inc. a letter of authorization (LOA) related to the potential disturbance of polar b...
White Papers

2015 Global Engineering Information Management Solutions Competitive Strategy Innovation and Leadership Award

The Frost & Sullivan Best Practices Awards recognise companies in a variety of regional and global...
Sponsored by

Three Tips to Improve Safety in the Oil Field

Working oil fields will always be tough work with inherent risks. There’s no getting around that. Ther...
Sponsored by

Pipeline Integrity: Best Practices to Prevent, Detect, and Mitigate Commodity Releases

Commodity releases can have catastrophic consequences, so ensuring pipeline integrity is crucial for p...
Sponsored by

AVEVA’s Digital Asset Approach - Defining a new era of collaboration in capital projects and asset operations

There is constant, intensive change in the capital projects and asset life cycle management. New chall...
Sponsored by

Transforming the Oil and Gas Industry with EPPM

With budgets in the billions, timelines spanning years, and life cycles extending over decades, oil an...
Sponsored by

Asset Decommissioning in Oil & Gas: Transforming Business

Asset intensive organizations like Oil and Gas have their own industry specific challenges when it com...
Sponsored by

Squeezing the Green: How to Cut Petroleum Downstream Costs and Optimize Processing Efficiencies with Enterprise Project Portfolio Management Solutions

As the downstream petroleum industry grapples with change in every sector and at every level, includin...
Sponsored by

7 Steps to Improve Oil & Gas Asset Decommissioning

Global competition and volatile markets are creating a challenging business climate for project based ...
Sponsored by
Available Webcasts

On Demand

OGJ's Midyear Forecast 2015

Fri, Jul 10, 2015

This webcast is to be presented by OGJ Editor Bob Tippee and Senior Economic Editor Conglin Xu.  They will summarize the Midyear Forecast projections in key categories, note important changes from January’s forecasts, and examine reasons for the adjustments.

register:WEBCAST


Predictive Analytics in your digital oilfield - Optimize Production Yield and Reduce Operational Costs

Tue, Jul 7, 2015

Putting predictive analytics to work in your oilfield can help you anticipate failures, plan and schedule work in advance, eliminate emergency work and catastrophic failures, and at the same time you can optimize working capital and improve resource utilization.  When you apply analytic capabilities to critical production assets it is possible to reduce non-productive time and increase your yield.

Learn how IBM's analytics capabilities can be applied to critical production assets with the goal of reducing non-productive time, increasing yield and reducing operations costs.

register:WEBCAST


Cognitive Solutions for Upstream Oil and Gas

Fri, Jun 12, 2015

The oil & gas sector is under pressure on all sides. Reserves are limited and it’s becoming increasingly expensive to find and extract new resources. Margins are already being squeezed in an industry where one wrong decision can cost millions. Analyzing data used in energy exploration can save millions of dollars as we develop ways to predict where and how to extract the world’s massive energy reserves.

This session with IBM Subject Matter Experts will discuss how IBM Cognitive Solutions contribute to the oil and gas industry using predictive analytics and cognitive computing, as well as real time streaming for exploration and drilling.

register:WEBCAST


The Alternative Fuel Movement: Four Need-to-Know Excise Tax Complexities

Thu, Jun 4, 2015

Discussion on how to approach, and ultimately embrace, the alternative fuel market by pulling back the veil on excise tax complexities. Taxes may be an aggravating part of daily operations, but their accuracy is crucial in your path towards business success.

register:WEBCAST


Emerson Micro Motion Videos

Careers at TOTAL

Careers at TOTAL - Videos

More than 600 job openings are now online, watch videos and learn more!

 

Click Here to Watch

Other Oil & Gas Industry Jobs

Search More Job Listings >>
Stay Connected