LONDON: World oil demand growth will accelerate next year, adding to the pressure on available supplies, the International Energy Agency said on Wednesday, contradicting a more conservative outlook from producer group OPEC.
In its first 2012 forecast in a monthly report, the IEA said oil use would grow by 1.47 million barrels per day (bpd) to 91 million bpd. The agency also trimmed its estimate of demand growth this year to 1.20 million bpd.
The IEA’s 2012 prediction was more than the 1.32 million bpd expected by OPEC and lower than a forecast from the United States’ Energy Information Administration. It expects all of the growth next year to come from emerging economies.
"Aside from economic growth, downside pressures from higher-than-expected oil prices also represent a risk to the forecast," said the Paris-based IEA, which advises 28 industrialised countries.
Differences between the Organization of the Petroleum Exporting Countries and consumer nations widened after the 12-member OPEC in June failed to reach a deal on a Saudi-led proposal to increase output.
In response, the IEA decided to release oil from emergency stocks for only the third time since it was founded in 1974 to fill the gap in supplies left by the disruption to Libya’s output.
The IEA on Wednesday maintained the stocks move had added supply of high-quality crude to a tight market and the agency took "a resolutely positive view" of the strategy so far.
"The point of the stock release was to add some liquidity and flexibility into the market. I think we’ve done that," David Fyfe, head of the IEA’s oil industry and markets division, told Reuters Insider.
Oil, trading at $117 a barrel on Wednesday, is higher than it was before the release. OPEC said the use of stocks had had no impact, while investor Jim Rogers on Wednesday called it "meaningless" to the market.
Fyfe said the IEA had yet to decide whether it would release more supplies and reiterated it would make a decision 30 days after the initial announcement on June 23.
2011 demand growth trimmed
Next year’s demand expansion follows on from lowered expectations for this year.
In the report, the IEA trimmed its 2011 global demand growth estimate by 70,000 bpd, citing the impact of high prices and a weaker economic outlook for developed economies.
While OPEC did not formally agree to boost its supplies at last month’s meeting, the IEA report added to evidence that core members are pumping more crude.
The IEA said OPEC output rose significantly in June following a unilateral supply increase from the group’s leading exporter, Saudi Arabia.
According to the IEA, Saudi Arabia pumped 9.7 million bpd in June, just shy of the 9.8 million bpd cited by a senior Gulf OPEC delegate on Tuesday.
Overall, OPEC production in June increased by nearly 850,000 bpd compared with May, the IEA said, but it still took the view that OPEC oil output would remain well short of expected demand.
It said demand for OPEC crude would average almost 31 million bpd in the second half of this year, around 1 million bpd more than OPEC produced in June.
The IEA also said Saudi Arabia’s crude exports could be eroded by a growing domestic need for oil for power generation, and OPEC’s oil production capacity would struggle until Libyan output began to recover.
It did not expect a Libyan recovery to happen until the end of 2012 and said OPEC capacity would fall to a low point of around 33.8 million bpd in the first quarter of next year. –Additional reporting by Simon Falush
