IEA cuts global oil demand outlook, warns on supply
By SARAH KENT
LONDON -- The International Energy Agency once again cut its outlook for global oil demand Thursday, but warned significant supply risks continue to threaten the market.
The downward revision by the Paris-based consumer group reflects similar moves by other industry forecasters earlier this week as concerns over the state of the global economy continue to weigh on demand expectations.
In its monthly oil market report published Wednesday, the Organisation of Petroleum Exporting Countries downgraded its forecast of world oil demand growth by 40,000 bpd for 2013, while the US Energy Information Administration cut its outlook by 140,000 bpd.
In its closely-watched monthly oil market report published Thursday, the IEA cut its expectations of oil demand growth to 795,000 bpd, down from 820,000 bpd last month.
The decline reflects exceptionally weak demand from industrialized countries, particularly in Europe where consumption in 2013 is expected to be the lowest since the 1980s, the IEA said.
The bleak economic picture is reflected in demand for oil products, with initial statistics showing that gasoline consumption may have outpaced consumption of gasoil -- commonly used in industrial processes -- last year and is expected to do so again this year; helped by strong demand for the transport fuel in China and Saudi Arabia, the IEA said.
However, gasoil demand growth is expected to outpace gasoline demand growth once more in 2014, it added.
Since early February the price of the European benchmark Brent crude has fallen around 10% to hover around $105/bbl, its lowest level since November last year.
Nonetheless, the IEA warned that significant risks to the market remain.
"There are signs that some of the recent easing of upward price pressures could be relatively short‐lived," the IEA said in its closely-watched monthly oil market report.
For the first time in months, the agency cut its expectations of non-OPEC supply growth for the year as infrastructure maintenance, extreme weather and geopolitical insecurity affected output in the first quarter of the year.
The IEA also highlighted significant risks to OPEC supply.
Nigerian oil production fell to a four-month low in March and could fall further following a resurgence in oil-theft-related damage to pipelines and renewed threats of militant attacks against the country's oil infrastructure, the IEA warned.
The IEA also warned that insecurity in Libya is threatening to derail the country's production outlook. Output fell by 40,000 bpd last month to 1.36 million bpd, according to the IEA's data. That is 150,000 bpd lower than the official figure provided by Libya to OPEC in its most recent report, published Wednesday.
Iranian output also remains constrained by strict Western sanctions with exports falling to 1.1 million bpd in March, down from 1.26 million bpd in February, the IEA said.
Dow Jones Newswires
From the Archive