Global oil demand is forecast to average 92 million b/d in 2014, up from 90.9 million b/d in 2013, according to the International Energy Agency’s most recent Oil Market Report. The forecast is underpinned by a rise in global gross domestic product growth to 3.8% in 2014, from 3.1% in 2013, forecasts the International Monetary Fund in its July World Economic Outlook.
The sharp depreciation of many emerging market currencies, due to the intention of the US Federal Reserve to taper quantitative easing, if sustained, coupled with already high oil prices in US dollar terms, may adversely affect oil demand, IEA noted.
The demand divergence between the Organization for Economic Cooperation and Development regions and the emerging markets has eased somewhat lately. In this year’s second quarter, OECD demand contraction has been curbed to -0.3% from a previous 5-year average annual decline of 1.7%, and the non-OECD demand growth slowed to 2.6% from a 5-year average of 3.6%.
OPEC crude oil supply in August is pegged at 30.51 million b/d, down 260,000 b/d from the upwardly adjusted July estimate. The decline was mainly attributable to a sharp downturn in Libyan production, which was only partially offset by near-record output from Saudi Arabia.
“Although Syria’s oil production has been reduced to only a small fraction of that country’s pre-civil war output for some time, concerns that the conflict could spill over into other countries of the region have affected the oil market,” the report said.
Due to extensive maintenance and outages in the North Sea and floods in China, total August non-OPEC supply slipped by an estimated 510,000 b/d to 54.5 million b/d from July. Despite the decline in August, non-OPEC supply is projected to have increased by about 520,000 b/d in this year’s third quarter compared with the previous quarter, according to IEA. With a combined liquids growth of 510,000 b/d in this year’s third quarter, the US and Canada contributed essentially to the recent quarterly non-OPEC supply gains.
OECD commercial total oil inventories ended July at 2.66 billion bbl. The deficit of OECD holdings to 5-year average levels widened to 65 million bbl, recording the widest level since October 2011.
After reaching a seasonal peak of 78.2 million b/d in July, global refinery crude throughputs are expected to fall steeply from August onwards due to weaker refinery margins and seasonal maintenance, the report said.
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