IEA revises world oil demand figures downward

By the OGJ Online Staff

LONDON, Apr. 12 -- Worldwide demand for oil products will continue to fall over the year despite being bolstered by factors including high natural gas prices in North America and delivery concerns, according to data released Thursday by the International Energy Agency, Paris.

IEA trimmed its forecast of global oil products demand growth in 2001 by 85,000 b/d to 1.325 million b/d, noting that the expected fallout from the slowdown in the US economy on Asia would "more than offset" strong product demand for power generation in North America.

"The drop," said the IEA, "reflected weaker than expected January deliveries in some countries, as well as the fact that the US economic slowdown, compounded by relatively high oil prices, will further reduce oil demand growth in those economies most dependent on US markets."

North American demand, having climbed by 5.5% in January, rose another 3.2% in February, prompting IEA to revise its estimate of demand growth for the region to 360,000 b/d. The IEA cautioned, however, that this assessment assumes a US economic rebound in the second half to shore up demand. Oil demand in other Organization for Economic Cooperation and Development countries, however, continues to fall off, it reported.

Comparatively robust oil products demand growth in the first month of the year in the four largest European economies and the OECD Pacific, it said, resulted from "mostly transient factors" such as Y2K distortions in Japan, and stockpiling of gasoil by German consumers. Without these factors, oil products demand would have fallen nearly 3% year-on-year in February in these European countries.

OECD oil products deliveries for January totaled 48.64 million b/d, up 0.9% from the same month last year, while in February deliveries were 49.62 million b/d, up only 0.7% from the same period last year.

Low OECD stocks
Meanwhile, OECD industry stocks dropped by 9.3 million bbl, or 0.33 million b/d, from downwardly revised January figures to 2, 514.4 million bbl, with product stocks falling more sharply than crude stocks rose. The IEA noted that it is the third straight monthly draw for OECD industry stocks.

While crude oil stocks in the OECD climbed over February by 7.8 million bbl, total product stocks dropped "significantly" by 18.6 million bbl.

"OECD industry stocks are low. By historical standards, they are low in absolute terms and even lower on a days-of-forward-demand basis," said the IEA.

On a days-of-forward-demand basis, the agency stressed, total OECD crude and product stocks are below what they were in 1996 and 1997 when high prices, advances in information and communication technology, and cost-reduction programs combined to nudge industry in the direction of just-in-time inventory practices.

The IEA noted that industry stocks across OECD regions have moved in "very different directions" due to government stockholding policies. North America experienced the sharpest reduction, dipping by 0.33 million b/d, while European stocks trended sideways, up by 0.09 million b/d.