LONDON (ICIS)--The International Energy Agency (IEA) on Tuesday forecast that oil demand in 2014 would be stronger than in the previous year on the back of “the likelihood of stronger economic momentum”.
The agency forecasts that global oil demand will grow by 1.3m barrels per day (bbl/day) to 92.5m bbl/d, compare to an estimated 1.2m bbl/day demand growth in 2013, noting that the bloc of OECD (Organisation for Economic Co-operation and Development) nations seems to have swung back into growth in 2013 for the first time since 2010.
“Global oil demand growth appears to have gradually gained momentum in the last 18 months, driven by economic recovery in the developed world,” the IEA said in its latest oil market report.
“Oil demand growth has been ramping up from a low point of 0.6m bbl/day year on year in Q3 '12 to a recent high-water mark of 1.5m bbl/day in Q3 '13. Key to this change has been a trend reversal in OECD demand,” the agency added.
According to the IEA, OPEC crude oil supply rebounded in December after four consecutive months of decline, on the back of strong gains in Saudi Arabia and the United Arab Emirates, and modest rises in Libya. Crude supplies from the region grew by 310,000 bbl/day to 29.82m bbl/day during the month, with only Iraqi output falling.
Spot prices also rose in during the month, according to the IEA, with the sharpest gains seen at the light end of the barrel. Crack spreads – the price gap between the cost of crude stocks and the value of refined products – improved for Asian refiners of naphtha and gasoline on the back of increased petrochemicals demand and refinery outages.
“European gasoil cracks, however, remained under pressure from US and Russian distillate imports while USGC [US Gulf Coast] refiners experienced a volatile month,” the IEA added.
Crude markets also firmed in December on stronger seasonal demand, while global supplies fell by 25,000 bbl/day during the month to 92.23m bbl/day as a result of a fall in biofuel output.
The agency’s forecast for global refinery crude runs for the first quarter 2014 increased by 110,000 bbl/day from last month’s estimate to 76.8m bbl/day due to surging output in the US.
IEA added that, despite increasing fourth-quarter 2013 demand estimates by 135,000 bbl/day compared to its December report, Chinese demand projections have been cut by 290,000 bbl/day to 10.2m bbl/day. Chinese GDP growth for 2013 was flat year on year at 7.7%.