IEA lifts oil demand forecast but warns on economy
Published August 11, 2010
| Reuters
By Emma Farge
LONDON, Aug 11 (Reuters) - Global oil demand growth will inch higher over the rest of this year and into 2011, but any rise could be eroded if the economy is weaker than forecast, the International Energy Agency (IEA) said on Wednesday.
The revisions were slight, and the IEA said in its monthly report that oil demand growth in 2011 would be sharply lower if the economy falters.
"We are flagging that the signals that are coming out are pretty mixed," said David Fyfe, head of the IEA's oil industry and markets division.
"We could lose all that (demand) growth in 2011 if GDP growth comes in about 30 percent lower than the consensus forecasts."
U.S. crude oil prices <CLc1> extended early losses following the IEA report before falling even further after a hike in U.S. oil products stocks, according to weekly data from the U.S. Energy Information Administration. [EIA/S]
Prices were down $1.95 at $78.53 a barrel by 1708 GMT.
"The report concurs with our view that global demand growth is slowing in the key economies, and that doesn't bode well. So the recovery is stalling, but it's unlikely that we will get a double-dip recession," said energy strategist Sabine Schels at Bank of America Merrill Lynch.
The IEA, which advises 28 industrialised countries, said global oil demand would rise by 1.8 million bpd (mbpd) year-on-year to 86.6 mbpd in 2010, which was 80,000 bpd higher than the forecast in its July report.
For 2011, it forecast consumption would rise to 87.9 mbpd, up 1.3 mbpd year-on-year and a 50,000 bpd rise from last month's forecast, taking account of baseline adjustments.
Overall, the IEA still expects a slowdown in the pace of growth from this year to next on early signs of flatter fuel consumption in the United States and China.
The IEA August demand forecast is higher than other major estimates, even after the EIA revised its figure up on Tuesday to 85.91 mbpd for 2010.
The Organization of the Petroleum Exporting Countries (OPEC) is expected to release its monthly report on supply and demand on Friday. <^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^
Reuters Insider interview with IEA's David Fyfe:
http://link.reuters.com/cam34n
Graphic on IEA's demand growth outlook by region:
http://graphics.thomsonreuters.com/F/08/OIL_IEAF0810.gif ^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^>
SUPPLY PRESSURE
Adding to the bearish elements for the oil price, IEA revised its supply forecasts upward by more than the hike in demand.
The organisation revised up non-OPEC supply by 200,000 bpd in 2010 to 52.6 mbpd and by 100,000 in 2011 to 52.9 mbpd compared with the previous month's report following an upwards U.S. baseline adjustment and higher Chinese output in the second quarter.
Its figures for outright non-OPEC supply growth were 850,000 bpd for 2010 and 340,000 bpd for 2011 as additional supplies come on stream in the countries of the former Soviet Union and in Latin America.
The upward trend in non-OPEC supply may be partially offset by regional project delays following BP's <BP.L> oil spill in the U.S. Gulf of Mexico, IEA said.
The IEA raised estimates for lost output to 60,000 bpd in 2010 and 100,000 bpd in 2011 as a result of the leak.
Oil stocks held in countries within the Organisation for Economic Co-operation and Development amounted to a comfortable 61 days of forward cover in late June and were barely changed from May, the IEA said.
The amount of crude oil in floating storage fell to 59 million barrels at the end of July from 85 million in June, the IEA said.
But oil products stored at sea rose by 4 million barrels to 34 million over the same period.
(With reporting by Barbara Lewis; editing by Jane Baird)
