Global oil demand will not grow by as much next year as it is expected to do this year, while supply from outside the Organization of Petroleum Exporting Countries will continue to surge, says the International Energy Agency.
In its first detailed projection for 2011, IEA said global oil demand will climb by 1.3 million b/d to 87.8 million b/d. IEA's July Oil Market Report projects demand growth for 2010 at 1.8 million b/d to 86.5 million b/d.
All demand growth in 2011 will be outside the industrialized countries represented by membership in the Organization for Economic Cooperation and Development (OECD).
IEA says non-OECD oil demand will climb to an average 42.5 million b/d in 2011 from a projected 41 million b/d this year. OECD demand will slip to 45.3 million b/d next year from 45.5 million b/d this year, up slightly from its level of 2009.
"North America will cease to act as an engine of demand growth in the OECD as the 2010 economic rebound, fueled by government spending and private-sector restocking, fades," IEA said. "This region's oil-demand decline will compound the fall expected in Europe and the Pacific."
IEA based its early 2011 demand projections on global economic-growth forecasts, published by the International Monetary Fund in April, of 4.3% in 2011 at 4.1% in 2010. It assumes an average global oil price of $79.40/bbl, unadjusted for inflation, and a decline in the amount of oil used per unit of economic growth of 2.6%.
Supply trends
Non-OPEC supply will rise to an average 52.8 million b/d in 2011 from a projected 52.4 million b/d in 2010 and 51.6 million b/d in 2009, IEA said.
Those numbers include biofuels, 2 million b/d in 2011, and processing gains, 2.2 million b/d.
The biofuels forecast is up 200,000 b/d from what IEA projects for 2010.
Other major non-OPEC supply gains will come from production in Brazil, Azerbaijan, Colombia, Ghana, and Oman, IEA said. Production will continue to decline in Mexico and the North Sea.
IEA projected increases in NGL production by OPEC members to 5.9 million b/d in 2011 and 5.3 million b/d in 2010 from 4.7 million b/d in 2009. NGL production isn't subject to OPEC quotas.
IEA doesn't forecast OPEC production of crude oil, which is strongly influenced by quotas. If inventories don't change, its forecasts for global demand, non-OPEC supply, and OPEC NGL imply a need for OPEC crude oil averaging 28.8 million b/d in 2010 and 29.1 million b/d in 2011.
OPEC crude production averaged 29 million b/d in the second quarter of 2010 and 29.1 million b/d in the first quarter.
IEA said capacity to produce crude oil among OPEC members will slip to 35.4 million b/d in 2011 from 35.6 million b/d in 2010. Capacity will fall again in 2012 because of natural declines, especially in Iran and Venezuela, before resuming growth in 2013 as major projects come onstream.
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