By SARAH KENT
LONDON -- Signs of improvements in the global economy that
have driven expectations of higher oil demand growth this year
could be overly optimistic, the International Energy Agency
said Wednesday as it revised its forecast for demand growth
In its closely-watched monthly report on the oil market, the
Paris-based consumer watchdog cut its oil demand growth
forecasts for the coming year by a marginal 90,000 bpd, but
warned that recent signs of recovery in the global oil demand
could be the result of one-off factors, rather than a sustained
trend of improvement.
In particular, the IEA called into question the extent to
which a steep increase in Chinese apparent demand at the end of
2012 could be taken as a sign of a more long-term improvement
"While higher Chinese refinery runs at that time may have
responded to an actual increase in end‐user demand, they
may also have led to significant product inventory builds,
potentially setting the stage for a slowdown or for an increase
in product exports later on," the report said.
The agency's cut in demand growth expectations for the year
to 840,000 bpd follows the release last month of an update to
the International Monetary Fund's World Economic Outlook in
which forecasts for global economic growth were revised
slightly lower for the coming year.
The IEA has already revised its estimates of global demand
in the fourth quarter of 2012 down by 210,000 bpd from last
month's estimates, largely as a result of lower demand from
Saudi Arabia and the US.
Nonetheless, demand assessments for the fourth quarter are
still nearly 500,000 bpd above estimates made in the agency's
The backdrop for this cloudy demand picture remains an oil
market of shifting supply and demand trends that is causing a
significant disconnect in prices globally, the IEA said.
The IEA expects non‐OPEC production to rise by 1
million bpd this year, largely due to higher output from North
America and parts of Asia.
But even as non-OPEC supply is seen increasing, the price of
global benchmark Brent has soared thanks in part to improved
economic signals in the US and China and a revival of investor
appetite for stocks and commodities.
Meanwhile, the world's largest oil producers also seem to be
cutting back. Supply from OPEC fell to its lowest level in a
year in January, the IEA said.
Geopolitical uncertainties are also underpinning prices
following on from the attack on the In Amenas gas facility in
Algeria last month.
Tighter sanctions on Iran could also see supply from the
Islamic Republic fall further, the IEA said.
Preliminary data for imports of Iranian crude in January
show volumes fell below 1 million bpd while the IEA said
production in the country is hovering below its lowest in 30
"It is hard, under the circumstances, to overstate the
challenges involved in bringing supply to market, which often
result in unprecedented price pressures," the IEA said.
Dow Jones Newswires