IEA further trims oil demand forecast

In its May oil market report, the International Energy Agency has lowered its outlook for 2009 global oil demand by 200,000 b/d, extending a string of downward revisions.

Marilyn Radler
Senior Editor-Economics

HOUSTON, May 14 -- In its May oil market report, the International Energy Agency has lowered its outlook for 2009 global oil demand by 200,000 b/d, extending a string of downward revisions.

The Paris-based agency now sees this year's worldwide oil demand averaging 83.2 million b/d, a 3% decline from 2008 demand. Preliminary data show second-quarter 2009 demand below previous expectations, notably in China, the US, and Russia, IEA said.

Forecast oil demand for members of the Organization for Economic Cooperation and Development has been adjusted down marginally for 2009 to 45.1 million b/d. An upward revision of 160,000 b/d in this year's first-quarter demand was largely offset by a downward adjustment to second-quarter 2009 demand.

Non-OECD oil demand is forecast to average 38.1 million b/d this year, down 140,000 b/d from 2008, which would be the first contraction since 1994, IEA reported.

IEA says that its 2009 oil demand forecast is consistent with recent patterns of economic activity and assumes that the global economy will markedly recover in 2010 at the earliest. And as far as oil demand is concerned, the weakness of the latest available data suggests that a quick recovery remains elusive.

Supply
Oil output by members of the Organization of Petroleum Exporting Countries pushed April global oil supply 230,000 b/d higher than a month earlier to 83.6 million b/d. OPEC crude production in April broke a seven-month downward trend, with output up 270,000 b/d to 28.2 million b/d, according to IEA estimates.

Excluding Iraq, OPEC oil output in April rose to 25.8 million b/d. With OPEC's output target at 24.845 million b/d, compliance was reduced to 78% vs. March's 83%.

In its latest report, IEA has also revised its outlook for total 2009 non-OPEC supply 50,000 b/d higher due to stable North Sea production and higher-than-expected Russian production in recent months. Still, the forecast calls for total non-OPEC supply to fall to 50.3 million b/d in 2009 from 50.6 million b/d last year.

Inventories
IEA figures show that OECD industry stocks rose 15.4 million bbl in March to 2.745 million bbl, as falling Pacific crude inventories only partially offset crude stockbuilds in North America and Europe.

OECD stocks in days of forward demand reached 62.4 days at the end of March, as inventories rose and 3-month forward demand fell. Preliminary April data indicate total OECD industry oil inventories rose by 23.2 million bbl, led by gains in US crude stocks.

Short-term floating storage continued to expand, as crude levels increased from 85 million bbl at the end of March to just over 100 million bbl at the end of April. Combined with the reported presence of about 25 million bbl of waterborne product inventories, mostly middle distillates, total short-term floating storage potentially adds 2-3 days to OECD total forward demand cover, IEA said.

Contact Marilyn Radler at marilynr@pennwell.com.

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