SF: IEA forecasts slower oil demand growth in 2011
Steam and other emissions are seen coming from funnels at an oil refinery i...
Global oil demand growth will slow next year, leaving the market with comfortable supplies until at least the middle of 2011, the International Energy Agency said in its monthly Oil Market Report on Tuesday.
The step change in demand growth between now and next year can be attributed to less government money being pumped into the economy to support growth, David Fyfe, head of the IEA's Oil Industry and Markets Division told Reuters.
"The key element is the gradual scaling back of economic stimulus programmes which we are assuming takes place over the next 12-15 months," Fyfe said in an interview with Reuters Insider TV.
"That's taking a little of the post-recessionary froth out of the market."
Global oil demand will grow by 1.35 million barrels per day (bpd) next year to 87.84 million bpd, the IEA, which advises 28 industrialised countries, said in its first 2011 demand projection in a monthly report.
That compared with demand growth of 1.77 million bpd expected this year -- a figure the IEA revised up by 80,000 bpd in Tuesday's report from its June estimate.
Earlier this month, the U.S. Energy Information Administration lifted its projection for 2010 world demand growth to 1.56 million bpd.
The Organization of the Petroleum Exporting Countries (OPEC) is expected to release its own monthly report on Thursday.
As it stands, the IEA is the most bullish of the three main forecasters on 2010 demand growth.
U.S. crude prices for August were up 95 cents at $75.90 a barrel by 1201 GMT after rising by as much as $1.10 to $76.05 a barrel earlier.
The IEA's forecast for 2011 reinforced the findings of its medium-term oil report which said rising supplies will mostly offset higher demand over the next five years.
Non-OPEC supply is set to rise by 400,000 bpd to 52.8 million bpd year-on-year in 2011, as supply comes onstream from Brazil, Colombia and Ghana, the report said.
This will largely offset declining output in Mexico and the North Sea.
Next year's demand growth will mostly come from Asia, the Middle East and Latin America as the global economic recovery gains traction, the IEA said.
"If you combine the two years of demand growth, it's still more than 3 million barrels a day which is pretty robust," said Carsten Fritsch, analyst at Commerzbank.
Demand for oil in countries within the Organization for Economic Cooperation and Development (OECD) -- including the world's largest oil consumer the United States -- will fall by 210,000 bpd next year.
"North America will cease to act as an engine of demand growth in the OECD as the 2010 economic rebound, fuelled by government spending and private-sector restocking, fades," the report said.
Refinery capacity additions of 2.3 million bpd in 2010 and 2011 will also prevent the type of downstream bottlenecks that occurred before the economic crisis, the IEA said.
(Editing by William Hardy)
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