After posting near-zero annual growth in the fourth quarter of 2011, global oil demand growth will gradually accelerate throughout 2012, culminating in an increase of 1.2 million b/d by this year’s final quarter, the International Energy Agency said in its latest monthly oil market report.
Global oil consumption is set to rise by 800,000 b/d this year to 90 million b/d, unchanged from the agency’s previous report, with gains in developing countries more than offsetting declining demand within countries of the Organization for Economic Cooperation and Development.
The International Monetary Fund raised its global economic growth projections for this year and 2013 in the World Economic Outlook published last month. IMF now forecasts 2012 growth of 3.5%, revised from 3.3% in January, and 4.1% next year, up from the prior forecast of 4%. Leading the upside revisions are stronger growth projections for the US, Germany, France, Canada, and Japan.
IEA said the world’s four biggest markets—China, the US, Europe, and Japan—should dominate the demand story in 2012. Chinese growth is forecast to maintain its global dominance in 2012, climbing by 400,000 b/d to 9.9 million b/d and accounting for nearly 50% of total worldwide growth.
Large demand declines are foreseen this year in Europe, down by 300,000 b/d to 13.9 million b/d, and in the US, down by 200,000 b/d to 18.7 million b/d. But Japan will buck the falling OECD demand trend, rising by 40,000 b/d to 4.5 million b/d, IEA said.
Among products, gas oil and diesel will provide the majority of the demand growth in 2012. Gas oil’s strength, largely attributable to the economies of the non-OECD, is seen growing by 500,000 b/d to 14 million b/d, supported by the still relatively strong industrial, construction, and agricultural sectors. OECD demand for gas oil is projected to fall by 70,000 b/d in 2012 to 12.5 million b/d, with lower heating oil demand outweighing increases foreseen in OECD diesel demand.
Having fallen by 80,000 b/d in 2011, gasoline demand is forecast to expand by 180,000 b/d in 2012, taking global gasoline consumption to 22.5 million b/d, IEA forecasts. Most of the growth is a result of rapidly expanding non-OECD incomes, as non-OECD gasoline demand is forecast to climb by 290,000 b/d to 8.7 million b/d. Demand will continue to contract in the mature OECD markets.
Global oil supply increased by 600,000 b/d to average 91 million b/d in April, up 3.9 million b/d from a year earlier, as crude production in the Organization of Petroleum Exporting Countries accounted for more than 70% of the increase. Higher supplies from Iraq, Nigeria, and Libya lifted OPEC production from by 410,000 b/d to 31.85 million b/d, as Iranian crude output was unchanged at 3.3 million b/d in April, according to IEA.
IEA said its “call on OPEC crude and stock change” is raised by 200,000 b/d to 30.9 million b/d for this year’s third quarter and by 400,000 b/d to 30.7 million b/d for the fourth quarter, with the 2012 average now 30.3 million b/d.
OPEC’s April effective spare capacity declined to 2.38 million b/d from 2.54 million b/d in March, IEA estimates. And for this year’s third quarter, OPEC sustainable crude capacity is expected to increase by 330,000 b/d to 35.3 million b/d.
OPEC has increased output for 7 months running, and volumes are now nearly 3 million b/d above April 2011 levels. Higher OPEC production has, in part, offset constrained non-OPEC supplies stemming largely from unplanned outages, and OPEC’s Persian Gulf producers also appear to have ramped up output ahead of the anticipated disruption in Iranian crude flows in coming months as the European Union’s July 1 oil embargo nears, IEA said.
EU and US sanctions are expected to impact 800,000-1 million b/d of Iranian exports compared to 2011 volumes.
Meanwhile, the agency’s figures show that non-OPEC supply increased by 100,000 b/d to 52.9 million b/d in April from a month earlier, as a seasonal rise in biofuels output offset declining supply in the UK North Sea and at synthetic crude plants in Canada.
Non-OPEC supplies are expected to rise by 600,000 b/d to 53.3 million b/d in 2012, down 90,000 b/d from last month’s estimate due to downward revisions to Africa and Latin America. The outlook assumes that substantial production stoppages affecting the Sudan, South Sudan, Syria, and Yemen persist for much of 2012, the report said.