The International Energy Agency, the energy adviser to 26 industrialised countries including Ireland, has cut its forecast for global demand for the rest of this year and 2008 as prices near $100 a barrel slow consumption in the US, Europe and Japan.
Global demand next year will be 87.69 million barrels a day, the IEA said today in its monthly report, 300,000 barrels a day less than its previous estimate. The IEA reduced its estimate for the fourth quarter by 500,000 barrels a day, to 87.14 million barrels.
The IEA has reduced its fourth-quarter forecast three times since August on expectations higher gasoline prices and an economic slowdown in the US will reduce demand in the world's largest economy.
Crude oil for December delivery fell is trading at $93.47 a barrel in electronic trading on the New York Mercantile Exchange, down $1.15 from Monday's close.
Last week, the IEA said in its annual World Energy Outlook that demand from China and India has boosted oil prices more than 50% this year. Half of the world's growth in oil demand is in China and the Middle East, where governments provide fuel subsidies, the report said
Chinese oil demand is expected to remain ``strong,'' driven by economic growth, while rising oil revenues in the Middle East mean that subsidies are ``more easily financed and unlikely to be removed,'' the IEA said.
Summary of November 2007 report:
WTI (West Texas Intermediate) hit a new record above $98/bbl in early November, driven by lower crude stocks, constrained supplies and new geopolitical tensions. There are, however, strong indications that high prices are depressing demand, which, together with signs of higher output from Saudi Arabia, Iraq and Nigeria, have capped further price gains.
OECD industry stocks fell by 29.5 mb in September, with Japanese crude stocks falling to their lowest level in at least 20 years. Total OECD forward inventory cover fell to 52.8 days, remaining close to the five-year average. Preliminary data for October suggest a further 21 mb draw in crude and product stocks in the US, Japan and EU-16.
Global demand for 4Q07 is revised down by 0.5 mb/d given high prices, weaker-than-expected data from the US and FSU, and delays to European heating oil restocking. Coupled with lower GDP growth, these revisions extend to the 2008 forecast, which has been adjusted down by 0.3 mb/d. World demand now averages 85.7 mb/d in 2007 (+1.2% over 2006) and 87.7 mb/d in 2008 (+2.3%).
World oil supply saw a monthly gain of 1.4 mb/d in October, as non-OPEC outages receded and OPEC volumes increased. Recovery in China and Azerbaijan plus rising Russian output boosted non-OPEC supplies. Continued outages in the OECD see non-OPEC supply levelling off in November before resuming growth in December.
October OPEC crude supply increased by 410 kb/d to 31.2 mb/d. Half the rise came from Angola and Iraq, where supplies could increase further in November. Signs of higher November supply from Saudi Arabia, Nigeria and others may be offset by UAE field maintenance. OPEC October spare capacity slipped to 2.46 mb/d.
Global refinery crude runs are seen at 73.5 mb/d in 4Q, revised lower by 0.7 mb/d, on the back of weaker demand, increased offline capacity and higher planned maintenance in some regions. Refinery outages and product specification changes have severely tightened European distillate markets.
