PARIS�The International Energy Agency has revised its forecasts of oil supply and demand for 2000, calling its new demand projection "conservative" and its supply prediction "optimistic."
IEA's latest report pegs 2000 oil demand at an average 75.8 million b/d vs. its first 2000 forecast of 77.1 million b/d, made a year ago. IEA attributes the demand decline largely to declining consumption in the former Soviet Union and slowing economic growth in the heavily industrialized countries of Europe. Liberalization of gas markets and switches to this energy source were cited as a lesser factor.
A downward revision of 1999 demand also contributed to the softer forecast for this year.
On the supply side, EIA has revised its global crude output estimate for 2000 upwards by 600,000 b/d, based mainly on growth in FSU oil supplies from that area's mature fields.
Higher oil prices have favored investment in fields previously considered marginal, said the agency, and "increased industry cash flows [have] contributed dramatically" to the industry rebound, especially in the areas of field maintenance, development drilling, and oil field equipment.
But, warned IEA, "It is unlikely this increase can be repeated or is sustainable over the medium term."
Average 2000 oil supply, including stockdraws, is now estimated at 75.8 million b/d�approximately equal to demand. This compares with earlier projections of 77.1 million b/d for demand and 77.0 million b/d for supply.
2001 forecast uncertain
IEA's latest report includes its preliminary supply-demand forecast for 2001, which presents a different picture.
Demand is expected to increase by 1.9 million b/d, or 2.5%, to 77.7 million b/d, predicts IEA. But the Organization of Petroleum Exporting Countries will hold the key as to whether overall supply levels will match demand.
Non-OPEC oil output is expected to reach 49.6 million b/d next year, an increase of 800,000 b/d over 2000 levels. But this will merely offset declining output from mature fields, says IEA. Companies still need to turn their attention to new exploration projects.
"The future is uncertain," said the agency, given that its forecast is underpinned by the assumption that oil prices will remain strong enough to encourage investment in exploration. Additional assumptions are an improved investment climate and sustained economic growth.