Global oil demand growth is forecast to ease further in 2016, the International Energy Agency (IEA) said on Thursday, predicting a slowdown in demand from some of the world's top consumers and a rise in demand from one particular economy.
Growth in global oil demand will ease to around 1.2 million barrels a day in 2016, the IEA said in its latest monthly report published on Thursday, below 2015's 1.8 million barrels a day (mb/d) expansion. This would take place, the IEA said, as "notable decelerations take hold across China, the U.S. and much of Europe."
It said such decelerations in those countries were the result of "slower industrial activity and generally mild recent winter temperatures" in member countries of the Organization of Economic Co-operation and Development (OECD). The agency also highlighted slower demand growth in China as the economy focuses on consumption rather than heavy manufacturing for its growth.
In contrast, the agency said that emerging economic powerhouse India could be replacing China as the "main engine of global demand growth."
"Strong gains in India remain one of the most persistent demand supports showing that if an economy remains fundamentally robust lower-oil prices can stimulate additional demand," the IEA noted.
Revised data for late 2015 and early data for 2016 showed year-on-year (y-o-y) oil demand growth of approximately 8 percent, the IEA said, and for 2016 as a whole, India will see growth of around 300,000 b/d – "the strongest ever volume increase."
On a global level, the IEA said that preliminary data in the first quarter of 2016 showed the slowdown in global oil demand growth was already happening with year-on-year growth down to 1.2 mb/d after gains of 1.4 mb/d in the fourth quarter of 2015 and 2.3 mb/d in the third quarter of 2015.
In the meantime, it said OPEC's crude oil production fell in March to 32.47 mb/d (still above the 13-member group's official output ceiling of 30 mb/d) "as ongoing outages in Nigeria, the UAE and Iraq more than offset a further increase from Iran and higher flows from Angola."
On a global level, oil supplies fell by 300,000 b/d in March to 96.1 mb/d with much of the drop in supply originating in the U.S. where it said the slide in light, tight oil production was "gathering pace" with data illustrating that by early April, the rig count had fallen nearly 80 percent from the peak seen in October 2014.
The latest data comes ahead of the closely-watched meeting of OPEC and non-OPEC producers in Doha, Qatar, on Sunday at which producers are to discuss freezing output levels in a bid to support prices. The IEA said that if there was to be a production freeze, "the impact on physical oil supplies will be limited."
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However, the IEA was confident that steady oil demand growth and falling non-OPEC supply meant that the oil markets looked set "to move closer to balance in the second half of this year."
Current oil prices, with Brent crude trading at $43.57 a barrel on Thursday and U.S. WTI at $41.17, showed that this was taking shape, the IEA said, although it noted that part of the recent support for prices was the expectation of some kind of output freeze in Doha.