IEA cuts oil demand forecast for 2012
WASHINGTON/LONDON:
17 October 2011
The International Energy Agency (IEA) cut its global oil demand growth projection while the US government increased its outlook for 2012, making it the most bullish forecaster as the economy heads into an uncertain year.
The US Energy Information Administration’s (EIA) outlook for oil demand growth next year was much stronger than the Paris-based IEA’s projection and the forecast issued by the Organization of the Petroleum Exporting Countries (Opec). Both the EIA and IEA stressed the risks to growth as economic conditions darken, but the wide gaps on growth prospects - including the most bearish from Opec itself - underscored the depths of uncertainty facing traders.
Oil prices were little changed as the revisions to the trio of benchmark forecasts did little to alter the perception that overall, oil demand continues to hold up relatively well.
Brent crude oil has risen nearly 13 per cent in the past six days, rallying back from near their lowest this year.
While economic conditions have forced the agencies to lower their demand projections, they still have stopped short of forecasting another recession, said Matt Smith, an analyst at Summit Energy, a subsidiary of Schneider Electric.
"They still see strength in global oil markets, that’s why we see these expectations for continued oil demand growth," Smith said. "It’s just being tempered somewhat with this economic uncertainty."
The IEA, an adviser to 28 industrialised countries, lowered its global fuel demand growth forecast for 2011 by 50,000 barrels per day (bpd) to 990,000 bpd. Next year, the IEA said world oil consumption will expand by 1.25 mbpd, 160,000 bpd less than previously expected.
"We’re seeing indications of weaker demand in markets like the Middle East, China and the US," David Fyfe, head of the IEA’s Oil Industry and Markets Division, told Reuters.
"If we are in double-dip territory, which is not our base case, we would be looking at much weaker demand growth."
The EIA, which made deep cuts to its demand outlook a month ago, made more modest adjustments to its forecast, curbing its estimate for world oil demand growth this year by 50,000 bpd and boosting next year’s growth rate by the same amount. The agency now expects world consumption to grow 1.32 mbpd to 88.4 mbpd this year, and a further 1.44 mbpd in 2012. Opec, which pumps a third of the world’s oil, forecast 2011 demand growing by just 0.88 mbpd to 87.81 mbpd. It is the first time this year that Opec has cut its oil demand growth estimate to below 1 mbpd.
Al Bawaba (Middle East) Ltd. (Middle East aggregated content)