IEA increases 2014 global oil demand on US recovery

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oil-opec-nw-mdGlobal oil demand in 2014 will be higher than previously forecast, after consumption in the US rebounded to its strongest level in five years, the International Energy Agency said.

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The IEA estimated this week in its monthly oil market report that demand will increase by 1.2 million barrels a day, or 1.3 percent, to 92.4 million a day next year, raising its projection from last month by 240,000 a day.

US fuel use rose above 20 million barrels a day in November for the first time since 2008, according to preliminary data. While the agency boosted its forecast for the crude volume OPEC will need to supply, “making room” for the potential return of Iranian exports “could be a challenge for other producers” in the group, it said.

“The geo-politicals are now bearish, while the fundamentals are bullish,” Michael Lynch, president of Strategic Energy and Economic Research in Winchester, Massachusetts, said before the IEA published its report. “This is quite a change from just recently. People are anticipating tighter supplies as we go into next year. Demand will be higher.”

Brent crude futures have slipped 1.4 percent this year, trading at about $110 a barrel in London Wednesday amid constrained fuel use and diminishing concern that tensions with Iran will escalate into a conflict that disrupts Middle Eastern crude exports. A “reasonably robust recovery” and lower gasoline prices in the US are helping stoke demand in the world’s largest oil user, the IEA said.

Oil product inventories in the most industrialised economies have “plummeted” as demand in these nations expanded in the second quarter after eight consecutive quarterly declines, the Paris-based adviser to energy-consuming nations said. Stockpiles of crude and refined products were at 2.7 billion barrels in October, or 19.7 million less than their five-year average.

The agency raised estimates for supplies required next year from the Organisation of Petroleum Exporting Countries by about 200,000 barrels a day, to 29.3 million a day. That’s still about 400,000 a day less than the group’s 12 members pumped in November, according to the report.

OPEC’s output fell for a fourth month, by 160,000 barrels a day, to 29.7 million a day in November, as a result of disruptions in Libya and smaller declines in Nigeria, Kuwait, the United Arab Emirates and Venezuela. The group decided to maintain its production target of 30 million barrels a day when it met on December 4 in Vienna.

Saudi Arabia, the organisation’s biggest member and de facto leader, kept production unchanged last month at 9.75 million barrels a day, the report showed.

A November 24 agreement between Iran and Western governments that eases some sanctions on the Islamic republic, including constraints on insurance for oil cargoes, “does not open the floodgates for Iran oil exports,” the agency said. The Persian Gulf country’s ranking among OPEC producers has slipped to sixth from second, the position it held until the European Union began boycotting Iranian crude in July 2012.

The embargo on Iran’s oil sales “leaves on the face of it no room for any sustained increase in exports,” which rose by 89,000 barrels a day last month to 850,000 a day, the IEA said. Even if restrictions were removed, “any meaningful increases would require a longer period and additional investment in Iran’s upstream, and thus would take time to materialise.”

The volume of crude Iran stores on tankers declined to about 22 million barrels at the end of November, from 37 million a month earlier, according to the agency.

The IEA kept its estimates unchanged for 2014 supplies from outside OPEC. Non-OPEC output, led by the US, Canada and Brazil, will rise by 1.7 million barrels a day to 56.5 million, it said.

Babatunde Akinsola
Babatunde Akinsolahttps://naija247news.com
Babatunde Akinsola is aNaija247news' Southwest editor. He's based in Lagos and writes on the Yoruba Nation political issues, news and investigative reports

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