The International Energy Agency cut global oil demand forecasts for this year and next as the economic recovery falters.
The Paris-based adviser reduced its estimate for 2012 consumption by 400,000 barrels a day, and for 2011 by 200,000 a day. Worldwide demand will rise by 1.2 percent to 89.3 million barrels a day this year and by 1.6 percent to 90.7 million next year. The full resumption of Libyan exports following the ouster of Muammar Qaddafi will be “long and difficult,” it said.
“Global oil demand continues to expand at only a tepid pace,” the IEA said today in its monthly Oil Market Report. “There are certainly growing concerns about the health of the global economy.”
Brent crude futures have dropped 11 percent from a 2011 peak of $127.02 a barrel reached in April, as Europe’s sovereign debt crisis spreads and global manufacturing slows. Brent fell below $112 today after the release of the report. Worldwide gross domestic product will expand by 4.2 percent next year, less than the 4.4 percent previously expected, the agency said.
“The IEA is more bearish than before, but I’m a little more pessimistic,” said Christophe Barret, a London-based analyst at Credit Agricole CIB whose prediction for 2011 demand growth is 200,000 barrels a day less than the agency’s forecast. “The demand side will be weak. The impact of prices on growth is starting to show with the slowdown in economic activity.”
‘Call on OPEC’
Supplies from the Organization of Petroleum Exporting Countries may be sufficient to meet demand over the next three quarters without the need for more production increases, the IEA said. The estimated demand for OPEC crude, or “call on OPEC,” will average 30.5 million barrels a day in the fourth quarter, close to the group’s production rate in August of 30.26 million a day, according to IEA estimates.
“That suggests that the recent spell of market tightening could moderate in the short-term, assuming that recent supply disruptions also recede,” the agency said.
OPEC’s 12 members collectively bolstered production by 165,000 barrels a day last month, led by increases in Saudi Arabia and Nigeria. That still left OPEC crude supply below the estimated level of demand for that oil this quarter, estimated at 31.3 million barrels a day, the report showed.
OPEC, responsible for 40 percent of global oil production, also trimmed demand estimates in its monthly report yesterday.
The IEA predicted a slower resumption of output in Libya than the producer group. The North African nation will likely restore output to 350,000 to 400,000 barrels a day by the end of this year, from zero last month, according to the IEA. OPEC forecast that Libya can reach 1 million barrels a day within six months and full capacity within 18 months.
The agency lowered its forecasts for oil supplies from outside OPEC, by 200,000 barrels a day this year because of field maintenance in the North Sea and Kazakhstan, and by 150,000 a day in 2012 amid weaker-than-expected output of natural gas liquids. Non-OPEC producers will boost shipments by 0.4 percent to 52.8 million barrels a day this year, and by 1.9 percent to 53.8 million a day in 2012.
Lower production caused oil stockpiles in developed nations to fall below their five-year average for the first time since 2008, according to the report. Inventories held by companies were at 2.687 billion barrels in July, or 58.4 days worth of consumption, after increasing 10.8 million barrels that month, less than half the typical increase for the time of year.