IEA sees modest oil demand increase in 2013

In light of muted economic recovery, global oil demand in 2013 will increase by 1 million b/d to average 90.9 million b/d, the International Energy Agency said in its latest monthly Oil Market Report. For the first time, demand in developing countries will overtake demand in the Organization for Economic Cooperation and Development (OECD).

The agency pegs 2012 demand growth at 800,000 b/d, or 15,000 b/d lower that its expectation a month ago with a weaker economic backdrop.

As well as providing all of next year’s growth, non-OECD demand overtakes that of the OECD from the second quarter of 2013 onwards, a phenomenon already observed in the refining sector, where non-OECD throughputs have surged ahead of OECD crude runs since 2010, IEA said.

The recent startup of nuclear capacity in Japan potentially diminishes one of the remaining props for OECD demand seen in 2011 and 2012, and China may not again post the 1 million b/d per year in demand growth that it did in 2010 but still will generate 30-40% of expected annual growth, IEA projects.

Leading next year’s demand growth will be non-OECD Asia, climbing by 2.9%, as well as the former Soviet Union, up by 2.4%, and the Middle East, up by 2.5%. Total non-OECD demand will average 45.7 million b/d, exceeding OECD demand by 600,000 b/d.

Supply

Crude oil supply from the Organization of Petroleum Exporting Countries—where IEA calls for production capacity to rise in 2013 by net 245,000 b/d—averaged 31.77 million b/d in June, down by 140,000 b/d from a month earlier, according to IEA estimates.

Saudi Arabia ramped up its output by 150,000 b/d to 10.15 million b/d last month; the higher volumes likely were earmarked for domestic use at power and desalination plants for the peak summer demand period, the Paris-based agency said.

Non-OPEC supply fell by 400,000 b/d from May amid labor strikes as well as a tropical storm and maintenance in the Gulf of Mexico.

IEA forecasts that non-OPEC supply in 2013 will climb by 700,000 b/d to average 53.9 million b/d. The boost is expected to be led by production growth in the Canadian oil sands, US tight light oil, and Brazil’s Campos and Santos basins.

Since IEA calls for OPEC natural gas liquids production next year to average 6.5 million b/d, the 2013 call on OPEC crude would be an average of 30.5 million b/d.