IEA cuts yearly oil demand forecast by 100,000 bpd

11 March 2008 12:24  [Source: ICIS news]

LONDON (ICIS news)--The International Energy Agency (IEA) cut its forecast for global oil demand this year as it expects slowing economic growth, particularly a looming recession in the US, to hit consumption, it said on Tuesday.

The agency shaved its prediction for 2008 demand by 100,000 barrels per day (bpd) to 87.5m bpd, from 87.6m bpd, it said in its monthly report.

Projected global oil product demand for the year was little changed, with downward pressures from weaker economic growth in the Organisation for Economic Co-operation and Development (OECD) countries mostly offset by stronger former Soviet Union projections, it said.

The agency also reined in its forecast for global demand in the year’s second quarter by 200,000 bpd to 86.4m bpd, while leaving the third quarter unchanged at 87.2m bpd and revising its demand forecast down by 100,000 bpd for the fourth quarter to 88.6m bpd.

Today’s oil price hit another record high on the NYMEX exchange, breaching the $109/bbl level.

Meanwhile, global oil supply increased by 185,000 bbl/day in February to 87.5m bbl/day with higher January OPEC crude supplies lifting the base, the IEA said.

 

Output recovery in Canada, Mexico and the Caspian republics offset reductions for Norway and OPEC in February, it added.

 

“Seasonal limits on OECD production and steady OPEC output may flatten global supply over the next two months,” the IEA said.

 

OPEC crude supply fell by 120,000 bbl/day to 32.1m bbl/day in February. Middle East Gulf and West African output fell 300,000 bbl/day, offset by a 150,000 bbl/day increase in Iraqi supply.

 

Oil prices again rose to new record levels in early March supported by strong distillate markets, geopolitical tensions and OPEC’s decision to rollover targets until the end of the summer, said the report.

 

“Persistently weak gasoline and fuel oil cracks are forcing distillate cracks higher to encourage marginal refiners to meet strong European gasoil demand,” the IEA said.

 

OECD industry stocks built by 32.6m bbl in January from an upwardly revised December, to reach 2.62bn bbl or 52 days of forward cover.

 

The IEA said global refinery crude throughput remained under downward pressure from poor refining economics, seasonal maintenance and operational problems.

 

The IEA is the energy adviser to 27 oil consuming countries.

By: Mark Watts
+44 20 8652 3214

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