LONDON: World oil demand will rise less than previously thought next year and evidence of a “bottoming out” of the recession is patchy at best, the International Energy Agency said on Wednesday.
The outlook from the IEA, which advises 28 consumer countries, follows two other cautious forecasts on oil demand this week.
“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,” David Martin, analyst at the IEA, told Reuters. “There is not clear evidence yet we have seen the worst.” World oil demand will rise by 1.3 million barrels per day (bpd) in 2010 to average 85.3 million bpd, the Paris-based IEA said in its latest monthly report.
The increase is 100,000 bpd less than previously forecast. The agency also revised upward global outright demand in 2010 by 70,000 bpd on the basis of higher fuel use in Asia and made a larger upward adjustment for 2009 demand, which is now assessed at 83.9 million bpd. That barely changes the sharp contraction in world oil demand expected in 2009 because of the recession, the IEA said, forecasting fuel use this year would be 2.35 million bpd lower than in 2008. The IEA cited a contraction in industrial production as a major limitation on demand and said global gas oil consumption — a key indicator of economic health — was significantly subdued. Only China and India were registering growth in industrial production and elsewhere production was still contracting, although the pace of contraction had slowed.
The IEA said stocks in developed countries still equated to 61.7 days of future demand at the end of June, unchanged from the previous month, which was revised lower from July’s report.
Global oil supply rose by 570,000 bpd in July to 85.1 million bpd, of which around two thirds came from non-OPEC countries. Still, 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 fell in July by around 100,000 bpd to 28.64 million bpd, the IEA said, citing record low output from Nigeria. Production by the 11 OPEC members with output targets, which exclude 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 2009 was revised upward by 160,000 bpd, chiefly because of stronger-than-expected Russian output. It is now seen at 51 million bpd in 2009 and will rise by 440,000 bpd in 2010.
Oil prices rose on Wednesday. Brent North Sea crude for delivery in September climbed 74 cents to $73.19 a barrel in London afternoon trade. New York’s main contract, light sweet crude for September, gained $1.01 to reach $70.52 a barrel.
