14 May 2013 12:37 [Source: ICIS news]
LONDON (ICIS)--Rising crude oil production and new refining hubs will ease supply and demand fundamentals but put European refineries at risk, according to a report from industry watchdog the International Energy Agency (IEA) published on Tuesday.
The IEA report predicts a threat to Europe from expanding refining capacity in the Middle East and Asia-Pacific.
In its monthly oil market report and medium-term oil report, the IEA highlighted increased oil supply and said supply growth in the next five years will outstrip demand.
The non-OPEC supply forecast was raised by 50,000 bbl/day to 54.50m bbl/day for 2013, due to rising production in South Sudan and North America.
OPEC production increased by 200,000 bbl/day to 30.70m bbl/day in April, where the majority of the growth was derived from Iraq.
However, the report noted OPEC production growth will be hindered in the medium term by growing insecurity in north and sub-Saharan Africa.
The US was particularly singled out in the medium-term report because of its recent surge in domestic oil production growth.
The country’s production is now forecast to grow by 3.90m bbl/day from 2012 to 2018 – equivalent to two-thirds of the total non-OPEC supply growth of 6.00m bbl/day during the same period.
However, despite rising production from the US, the price of NYMEX WTI weakened by less than $1.00/bbl in April – relatively unscathed compared to a $6.10/bbl drop in ICE Brent, which narrowed the Brent/WTI price spread to around $7.75/bbl.
Global oil demand is forecast to grow by 65,000 bbl/day in 2013 to 90.60m bbl/day. However, the upward revision was largely attributed to revised data from Germany for 2012.
In its medium-term report the IEA noted that non-Organization for Economic Cooperation and Development (OECD) nations are now in the driving seat, as non-OECD demand overtook OECD demand during the first quarter.
Aside from changing demand patterns, the medium-term report also pointed out risks to European refiners – which will take the brunt of expanding refining capacity in the Middle East and the Asia-Pacific region – and warned that some European refineries are at risk of closure.
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