A combination of persistently high prices and a weak economic backdrop will keep a lid on oil consumption this year, the International Energy Agency (IEA) said on Friday, while a slightly stronger macroeconomic outlook in 2013 will likely be offset by the resumption of nuclear capacity in Japan reducing the need for oil.
The IEA raised its estimate of global oil demand growth for this year to 900,000 barrels per day (bpd) from around 800,000 forecast last month and said demand would increase by around 800,000 bpd in 2013, down from the 1 million bpd it forecast in July.
“A relatively subdued global oil demand forecast persists for both 2012 and 2013, resulting from the weak economic backdrop,” the report said, with global demand for oil rising just 1 percent with estimated output for 2012 averaging 89.6 million barrels per day (mb/d) and rising to a meager 90.5 mb/d average in 2013.
The agency expects global economic growth of around 3.3 percent for 2012, rising to 3.6 percent in 2013 — down marginally from last month’s report (3.8 percent) as the economic backdrop has worsened.
Global oil supplies grew by 0.3 mb/d month-on-month to 90.7 mb/d in July with global oil output 2.6 million barrels a day above a year ago, despite crude oil supplies declining from Iran, Angola and Libya as political and economic disruption and sanctions weighed on numbers.
The IEA said that aggregate demand among OECD (Organization for Economic Cooperation and Development) countries was largely flat in June year-on-year, countered by the strong growth trajectory in Asia of 5.8 percent from last year.
“Strong growth in Asia and Oceania, caused by post tsunami additions to Japan and the robust expansion that continues to be seen in Korea, balanced out modest declines elsewhere...”
However the Asian growth story was countered by the “subdued” demand seen across the Americas and gloomy outlook in Europe, the report said, due to an erosion in consumer sentiment, a rise in unemployment and a deterioration in confidence in the manufacturing sector.
“Subdued demand conditions persist for OECD Americas — the U.S., Canada, Mexico and Chile — suppressed by a combination of stuttering economic growth, relatively high oil prices and continued efficiency gains…The oil demand outlook remains relatively bleak in Europe, reflecting the ailing state of the economic backdrop there.”