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 (IEA) said on Wednesday.
The outlook from the IEA, which advises 28 consumer countries, follows two other cautious forecasts on oil demand this week. Oil prices eased following its release and were trading below $70 a barrel.
“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 upwards 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.
“Despite the amelioration of some economic indicators in a few countries, the most that can be said is that the global economy may be stabilising,” the IEA said in its report.
No Inventory Decline
Partly because of insipid summer gasoline demand in the US, the drawdown in fuel inventories typical of this time of year has not happened.
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.
Other estimates of Opec supply, including figures given by Opec in a report on Tuesday, found output rose in July. The IEA estimates Saudi Arabia pumped 8.3 million bpd in July, 250,000 bpd more than Opec’s figure.
Total non-Opec supply for 2009 was revised upwards 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.
Demand for Opec crude, which averages 27.7 million bpd in 2009 and 27.8 million bpd in 2010, is trimmed slightly for the second half of this year and next year as the higher non-Opec supply offsets the impact of more consumption.
The IEA is the last of three major forecasters to issue monthly oil reports this week.
On Tuesday, Opec said the world would need less oil than previously thought from its members in 2010, and the US Energy Information Administration lowered its 2009 world demand estimate.