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THURSDAY, 23 MAY 2013
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IEA forecasts oil demand decline on weak economic outlook
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A storage tank looms over a freeway at the Enbridge Edmonton terminal in Edmonton August 4, 2012.   (REUTERS/Dan Riedlhuber)
A storage tank looms over a freeway at the Enbridge Edmonton terminal in Edmonton August 4, 2012. (REUTERS/Dan Riedlhuber)
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The International Energy Agency cut global oil demand forecasts for this year and next, estimating that growth will slow in 2013 amid weaker expectations for the economy and the restart of nuclear plants in Japan.

The Paris-based adviser, which last month predicted a pickup in demand for next year, estimates that growth in world oil use would decelerate to 800,000 barrels a day, or 0.9 percent, in 2013 from 900,000 a day, or 1 percent, this year. Global demand will average 90.5 million barrels a day next year, or 400,000 a day less than estimated last month as a result of revisions to data since 2010.

“A relatively subdued global oil demand forecast persists for both 2012 and 2013, resulting from the weak economic backdrop,” the agency said in its monthly report.

“Demand growth will likely fall in 2013, as the stronger macroeconomic outlook is offset by, among other reasons, the resumption of nuclear capacity in Japan, reducing prospective oil needs from the power sector.”

Brent crude futures have lost 13 percent from this year’s peak, trading at about $112 a barrel in London Friday, amid concern that Europe’s sovereign debt crisis will curtail energy demand.

World economic expansion in 2013, while expected to be faster than this year, is forecast at 3.6 percent by the agency, compared with 3.8 percent in last month’s report. Japanese crude demand will fall 3 percent in 2013 as the country reactivates nuclear capacity halted since last year’s meltdown at the Fukushima Dai-Ichi power plant.

Oil demand in Japan will slide by 140,000 barrels a day to 4.5 million in 2013, according to the IEA. In contrast, China’s consumption is forecast to increase 2.8 percent next year to 9.75 million barrels a day.

Last month, in the agency’s first assessment of 2013, it predicted global demand growth of 1 million barrels a day, or 1.1 percent, compared with a growth outlook for this year of 800,000 barrels a day, or 0.9 percent.

“This report is not really changing anything as for the most part they’ve left growth rates unchanged,” said Harry Tchilinguirian, head of commodity markets strategy at BNP Paribas SA in London, who considers the IEA’s estimates on Chinese and U.S. demand as “cautious.”

“They’re still on a wait-and-see mode in terms of Chinese oil demand,” Tchilinguirian said. “What we expect is more policy-easing in China and so a greater acceleration for Chinese oil demand in the second half of this year.”

The agency Friday said it lowered demand assessments after making “baseline revisions” to data back to 2010, concentrated particularly in China, the Middle East and the former Soviet Union. World consumption will average 89.6 million barrels per day this year, following a 250,000 bpd downward revision.

Production by the Organization of Petroleum Exporting Countries fell last month by 70,000 barrels a day to 31.39 million as lower output from Iran, Angola and Libya offset higher supply from Iraq, the United Arab Emirates and Qatar, the agency said. Global supply still rose by 300,000 bpd to 90.7 million in July, with 60 percent of the increase coming from non-OPEC nations.

Iraq’s production rate exceeded that of Iran for the first time since Saddam Hussein’s era, while Saudi Arabian output was unchanged at 10 million bpd, according to IEA estimates. Sanctions are limiting Iranian exports.

Output from the 12-member organization is “just above” market requirements for the third quarter of 31 million bpd.

Production is 1.39 million more than the 30 million ceiling reaffirmed by OPEC at its last meeting in June.

The agency kept assessments for supply from outside the organization unchanged. Non-OPEC producers, such as Brazil, Canada and Russia, will bolster output by 700,000 bpd next year to 53.9 million a day.

Oil industry inventories in developed nations fell by 5.5 million barrels in June to 2.68 billion, leaving them 19.2 million below five-year seasonal norms, according to the agency. The level equates to consumption worth about 57.8 days.

 
A version of this article appeared in the print edition of The Daily Star on August 11, 2012, on page 4.
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