Exploring Hydrocarbon Depletion
NEW! Members Only Forums!
Access more articles, news & discussion by becoming a PeakOil.com Member.
Page added on January 18, 2013
The International Energy Agency raised forecasts for global oil demand this year because of stronger growth expectations for China and said the world oil market is “tighter” than previously estimated.
“All of a sudden, the market looks tighter than we thought,” the Paris-based agency said, boosting its 2013 global demand forecast by 240,000 barrels a day. World consumption will increase by 900,000 barrels a day, or 1 percent, this year to average a record 90.8 million. Saudi Arabia, the world’s largest exporter, reduced production from its highest in 30 years, and inventories in developed economies are contracting after accumulating in much of 2012, according to the IEA.
“China has been doing quite a bit of growth-supportive policy,” Amrita Sen, chief oil market strategist at research consultant Energy Aspects Ltd. in London, who predicts the IEA may further increase its demand forecast for the Asian country. “Clearly there’s an underlying momentum” in the nation’s consumption, she said.
Brent crude futures traded at $111 a barrel on the London- based ICE Futures Europe exchange today, after advancing 3.5 percent last year. Economic growth in China, the world’s biggest energy user, accelerated in the fourth quarter for the first time in two years amid government measures to revive demand.
China will use 390,000 barrels a day, or 4 percent, more oil this year than in 2012, to reach 10 million a day, according to the adviser to energy-consuming nations. That’s 135,000 more than previously predicted. The nation’s gross domestic product expanded by 7.9 percent in the fourth quarter from a year earlier, the National Bureau of Statistics said today.
“Recent bullish readings have signaled the potential for a rebound” in China’s economy, the IEA said in its monthly oil market report. Global oil demand growth remains “relatively restrained,” the agency said.
The Organization of Petroleum Exporting Countries cut production to the lowest level in a year in December, curbing supplies by 265,000 barrels a day to 30.65 million, the IEA estimated. Saudi Arabia, the group’s biggest member, curtailed output by almost 290,000 barrels a day to 9.4 million because of a decline in domestic consumption.
Even after the drop, OPEC is producing about 650,000 barrels a day more than the average of 30 million it will need to provide in 2013, the IEA said. OPEC’s 12 members pumped an average of 31.4 million barrels last year, the highest annual level in its history.
“This IEA report is basically a message to Saudi Arabia: ‘please, please, don’t cut further’,” Olivier Jakob, managing director at Zug, Switzerland-based Petromatrix GmbH, said in an e-mailed report.
Producers outside of OPEC such as the U.S., Canada and Brazil will increase supplies this year by the most since 2010, the IEA said. Non-OPEC producers will boost output by 980,000 barrels a day to 54.3 million a day, an increase of 150,000 barrels from last month’s projection.
Oil inventories in the world’s most industrialized nations fell by 18.7 million barrels in November, declining about three times more than normal for the time of year, the agency said. Stockpiles were at 2.7 billion barrels, narrowing their surplus to the five-year average to 4 million barrels. Refined product levels were equivalent to 30 days of consumption, the IEA said.
Several European refineries have reduced production counter-seasonally because of a fall in processing margins and more will probably cut operations if profits don’t recover, the agency said.
“Weak demand, in part due to a mild winter and the progressive return from maintenance of European and Russian refineries, has driven down European refining margins by $3 a barrel in northwest Europe and $2 a barrel in the Mediterranean,” the IEA said.