Oil demand to rise in 2014 on improving global economy: IEA

11 July 2013 12:10  [Source: ICIS news]

LONDON (ICIS)--Global oil demand will grow by 1.2m bbl/day in 2014 to 92.0m bbl/day as the world economy continues to recover, the International Energy Agency (IEA) said on Thursday.

“Momentum is forecast to build in 2014 as the economic backdrop that underpins demand is thought likely to brighten,” the IEA said in its latest monthly oil report.

Demand growth for 2013 is forecast at 930,000 bbl/day, the agency said.

“Accelerating oil demand growth is expected to be supported by a stronger macroeconomic backdrop, in line with the International Monetary Fund’s April World Economic Outlook forecast of 4% global GDP growth in 2014, up from 3.3% in 2013."

The IEA said demand growth would be “unevenly distributed across the barrel” with gasoil, which includes diesel, expected to lead 2014 growth with incremental demand of around 400,000 bbl/day.

This would be followed by gasoline (+300,000 bbl/day) and liquid petroleum gas (LPG) (200,000 bbl/day).

“Gasoil demand growth had briefly dipped below that for gasoline in 201213, but is expected to leap ahead again on the back of stronger industrial and manufacturing growth,” the IEA said.

Emerging markets and developing economies will lead demand growth in 2014, more than offsetting continued contraction in the Organisation for Economic Co-operation and Development (OECD) countries.

"While demand in the OECD is expected to contract, it will do so at a much slower pace than has been the case in the last few years since the 2008 financial crisis, edging down by 0.4% in 2014 compared to the 0.8% drop of 2013. This forecast slowdown in OECD demand contraction reflects expectations that OECD economies will on average return to growth in 2014,” the report said.

The IEA said its demand forecast was still subject to significant risks, with macroeconomic uncertainty foremost among them.

 “Given the downside risks to the IMF’s 4.0% growth forecast for 2014 estimate, our 1.2m bbl/day oil demand growth forecast for that year could also prove optimistic (or pessimistic, depending upon how economic growth unfolds),” it said.

On Wednesday, OPEC was slightly more conservative in its monthly report, forecasting that 2014 world oil demand would rise by 1.0m bbl/day, or 1.2%, from 2013 to average around 90.7m bbl/day.

By: Graeme Paterson
+44 20 8652 3214

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