Oil demand growth next year will be slightly less than previously forecast at 1.3 million barrels per day (bpd) and the evidence of a “bottoming out” of the global recession is patchy, the International Energy Agency said on yesterday.
In a monthly report, the agency revised upwards global outright demand next year by 70,000 bpd to 85.3 million bpd on the basis of higher fuel use in Asia.
Demand growth, however, was reduced by around 100,000 bpd from the 1.4 million bpd estimated a month ago following a larger upward adjustment for this year’s demand, now assessed at 83.9 million bpd.
With any growth concentrated in Asia, forecast demand in developed countries next year was broadly unchanged.
In particular, it cited a contraction in industrial production as a major limitation on demand for refined products.
“Evidence of a bottoming out of the recession is still a bit patchy. The latest data on industrial production for some of the larger countries remains negative,” said David Martin, analyst at the IEA.
“There is not clear evidence yet we have seen the worst,” he said.
The report said global gasoil demand — a key indicator of economic health — was subdued.
Only China and India were registering growth in industrial production and elsewhere production was still contracting, although the pace of contraction had slowed.
Combined with the impact of an insipid US summer driving season, the drawdown in stocks typical of this time of year has not happened.
The IEA said stocks in developed countries still equated to 61.7 days of forward cover at the end of June, unchanged from the previous month, which was downwardly revised from an earlier report.
Global oil supply in July rose by 570,000 bpd in July to 85.1 million bpd, of which around two thirds came from non-OPEC countries.
Compared with July last year, global oil supply has contracted by 2.6 million bpd, almost entirely because of OPEC crude production cuts.
Output from the Organization of the Petroleum Exporting Countries contracted last month by about 100,000 bpd to 28.64 million bpd, it said, citing record low output from Nigeria.
Production by the 11 OPEC members with output targets, which excludes Iraq, was down by 120,000 bpd at 26.12 million bpd — 1.28 million bpd above the group’s agreed production ceiling.
Total non-OPEC supply for this year was revised upwards by 160,000 bpd, chiefly because of stronger-than-expected Russian output.
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