The International Energy Agency (IAE) cut its forecast for global oil demand this year, after consumption fell in the fourth quarter of last year for the first time since the credit crunch three years ago, warning it could reduce estimates further.
Worldwide crude consumption will increase by 1.1 million barrels a day this year, or 200,000 less than previously estimated, to 90 million barrels, the agency predicted in its monthly market report. A portion of Iran’s exports will probably be denied to customers in developed economies in the second half of the year, as EU leaders prepare tougher sanctions to deter the country’s nuclear program, the agency said.
“Clear signs of economic weakness tipped global oil demand into a declining year-on-year trend at the end of 2011,” that was intensified by crude prices above US$110 a barrel, the agency said.
“Eurozone indebtedness has not gone away. Oil demand will likely confront this growth--impeding combination of a weakening economy and high crude prices through the early stages of 2012,” it added.
Oil demand will shrink in developed nations this year as Europe’s sovereign debt crisis crimps growth, the agency said. However, Brent crude futures have advanced by 4 percent this year, trading at US$112 a barrel yesterday, as concern of a recession are balanced by the risk that Iran will retaliate against an EU ban on its crude exports.
Global consumption will increase by 1.2 percent this year, the agency estimates. Demand in the most industrialized nations will shrink by 300,000 barrels a day, or 0.7 percent, this year, while fuel use in emerging economies will grow “modestly,” by 1.4 million barrels, or 3.2 percent, the agency said.
The demand assessment could be reduced further, depending on economic growth revisions from the IMF and other institutions, the agency said. The IMF will release its next assessment of world GDP on Tuesday.
OPEC, which provides about 40 percent of the world’s oil, is pumping about 890,000 barrels a day more than the average amount that will be required from the group this year, according to the report.
Its 12 members boosted output by about 240,000 barrels a day last month to a three-year high of 30.89 million a day, led by a “rapid” recovery in supplies from Libya, the agency said. The organization will need to supply an average of 30 million barrels this year, in line with the output target agreed by members at their last meeting on Dec. 14,the agency said.
Oil inventories held by companies in developed economies remained below their five-year seasonal norm for a fifth consecutive month, according to the report. Stockpiles in the OECD rose by 4.1 million barrels to 2.6 billion in November. That is equivalent to 57.5 days worth of consumption, the agency estimated.
The IEA also cut its forecast for growth in China’s oil-product demand this year as the economy of the world’s biggest energy user slows.
Consumption could increase by 4.3 percent, down from the 5.2 percent growth predicted last month, the agency said. The outlook reflects a forecast easing in the nation’s economic growth to 9 percent this year from 9.5 percent and a lower baseline this quarter, it said.
China’s oil use could rise by 0.4 million barrels a day to 9.913 million this year and would account for about 40 percent of the global increase, the agency said.