Global oil demand growth 'gaining momentum'
London, December 12, 2013
Surging oil demand and faltering supplies mean oil prices face upside risks over the next few months, the West's energy watchdog said.
The International Energy Agency (IEA) said in its monthly report that after eight consecutive quarters of contraction, oil demand in the world's heavily industrialised countries returned to growth in the second quarter of this year.
Since then, demand for fuel had accelerated, particularly in the US, the world's biggest oil consumer.
Last month, US oil demand jumped above 20 million barrels per day (bpd) for the first time since the 2008 financial crisis, IEA data showed, although it was not clear whether part of this demand reflected higher exports from U.S. refiners.
"The trend shows a bounce in oil demand, not just in the United States but in Europe as well," Antoine Halff, head of the IEA's oil industry and markets division, told Reuters.
"The big contraction in demand that we have seen for the last few years seems to have flattened out and reversed for now," he added.
The IEA, which advises large oil-importing nations on energy policy, said this could help strengthen the oil market.
"Oil markets participants have been bracing themselves for a soft patch in the first quarter. But upside risk to oil markets, from both the supply and the demand sides, is proving remarkably persistent," the report said.
Oil prices have been remarkably steady over the last three years, averaging close to $110 a barrel, held in check by sluggish global demand and a series of disruptions to supply across the Middle East and North Africa.
but fuel demand is rising as economic growth accelerates.
The Paris-based agency revised up its estimates for global oil demand growth by 145,000 bpd to 1.2 million bpd for 2013 and by 110,000 bpd to 1.2 million bpd for 2014.
This will bring global oil consumption to more than 92.4 million bpd next year.
As a result, the Organization of the Petroleum Exporting Countries will need to pump more oil next year and the IEA raised its estimate of demand for OPEC oil by 200,000 bpd to 29.3 million bpd.
However, this extra demand could be easily met if oil production were to increase in Libya and other Opec countries that have been affected by civil unrest and other problems.
The IEA said output from Libya plummeted to just 220,000 bpd in November, less than half the 450,000 bpd produced in October and the agency said the oil industry in the North African producer faced "renewed headwinds".
Opec oil supply fell for the fourth straight month in November, dropping 160,000 bpd to 29.73 million bpd, it said.
Iranian oil production has also been curtailed by Western sanctions over the Islamic republic's nuclear programme and its exports are now around 1 million bpd below their level two years ago, industry data shows.
Iran and the big world powers agreed an outline deal last month that could lead to the gradual lifting of sanctions, and allow more oil exports. But this could mean lower demand for oil from other key producers, the IEA said.
"Making room for Iran - assuming it could quickly ramp up production after years of sanctions - could be a challenge for other producers, especially in the face of rising non-Opec supplies," the report said.
The IEA estimated oil supply from producers outside Opec had increased by 1.4 million bpd this year, and forecast a further increase of 1.7 million bpd in 2014.-Reuters