The International Energy Agency has reduced its forecast for growth in oil demand in 2012 to 1.1 million barrels per day from 1.3 million bpd. The lower demand will stem from the weak economic conditions in the OECD nations, off-set in part by continued heavy demand from Asian consumers. As a result, global demand for oil will be roughly 90 million bpd.
Noting that European consumption in November fell by 4.6%, the IEA stated, “Against a backdrop of weakening economic performance, regional oil demand looks particularly sluggish in Europe.” Meanwhile, non-OECD countries “will continue to dominate growth looking forward”, with their demand climbing 3.2%, rising by roughly 1.4 million bpd. Yet “this is 130,000 bpd less than assumed in last month’s report, following a modest downward adjustment for growth prospects in China,”
Looking at the supply side of the equation, non-OPEC supply declined by 140,000 bpd to 53.2 million bpd, stemming from Middle East unrest and other unplanned outages. The IEA expects a rebound to 340,000 bpd growth in first quarter 2012 and 1.0 million bpd for 2012 as a whole.
At the same time, OPEC oil output in December rose by 240,000 bpd to 30.89 million bpd. This is the highest output by OPEC in more than three years and slightly above the 30 million bpd target the cartel has set for its members. Saudi and UAE increases are partially responsible for this rise, but much is due to Libyan oil returning to the global system.
The organization noted that geopolitical risks remain in Nigeria, Iraq, and “most pressingly, Iran.”