December 11, 2013
The data is pervasive and convincing on oil demand. The growth patterns from around the world both show growth. The query is that some will lead as other laggard. The news from the “IEA raises oil demand outlook on European, US growth” for a shinning outlook within today’s economic recovery.
“The International Energy Agency (IEA) issued an upbeat outlook for the United States and Europe on Wednesday, saying economic recovery in the advanced economies is expected to lift global oil demand. The IEA, highlighting strongly growing consumption in the United States as economic recovery takes hold, said that it was raising its oil demand forecast for 2013 and 2014,” reports Asia Channel News.
“And despite the stronger-than-expected performance by the world’s richest economies, it is the non-OECD economies which are still forecast to continue leading oil demand growth. The IEA raised its estimate of the growth of global oil demand this year by 1.3 per cent to 145,000 barrels per day (bpd). The IEA noted that US oil demand booked the “fastest pace of growth experienced in nearly 10 years, and even longer if growth is measured in percentage terms.”
This meant it expected total demand to rise by 1.2 million barrels per day (mbd) overall in 2013 from the level in 2012. That would take aggregate demand this year to 91.2 mbd, and this would rise by 1.2 mbd in 2014, to reach 92.4 mbd. Demand for September averaged nearly 19,100 bpd, up 0.9 mbd year on year, said the agency.
Contrast the U.S. demand with EU. EU demand for oil added to the increase. “Large North European economies such as Germany, France, Belgium, the UK and much of Scandinavia have led the upside, but even the Mediterranean region, where demand had nosedived, has enjoyed a significantly slower pace of decline,” said the IEA. Average demand growth for the continent stands at about 175,000 bpd, reversing a previous decline rate of 530,000 bpd. Meanwhile, supplies were also up in November, gaining 310 kbd to 92.3 mbd, fuelled by an increase in non-OPEC production.
Non-OPEC supplies rose by 470,000 barrels per day during the month on an annual basis to 56.16 mbd. OPEC output was down in November for the fourth month in a row to reach 29.73 mbd, down by 160,000 bd from October.
“The decrease in November crude oil output was mainly the result of a drop in Libya’s production, although smaller declines occurred in Nigeria, Kuwait, UAE and Venezuela. All of these decreases more than offset higher output in Iran, Iraq, and Angola. Saudi Arabia’s production averaged 9.75 mbd in November, unchanged from October. Meanwhile, Iran’s crude production rose only slightly to 2.71 mbd in November from 2.68 mb in October, despite a landmark interim agreement between Tehran and world powers to curb Iran’s nuclear drive.
The demand for oil is dynamic and globally engaged that continues to push the market, driving output. The market is always a slippery slope as the big players thrive their will be new entrants. Further, new energy sources will reduce demand over time as renewables and nuclear continue to grow.