BLBG:IEA Boosts 2016 Oil Demand Forecast, Says $100 Crude Is a Threat to Growth
The International Energy Agency raised its forecast for global oil demand to 1.3 percent annually over the next five years on economic growth in China, cautioning that gains in prices threaten the recovery.
Consumption will increase to 95.3 million barrels a day in 2016 from 88 million barrels a day in 2010, with China accounting for about 41 percent of the gain, the Paris-based adviser to oil-consuming nations said in its Medium-Term Oil Market Report today. Crude prices are “weighing” on the developed nations that make up the Organization for Cooperation and Development, the agency said.
“The resilience of emerging economies, which navigated relatively unscathed through the rough waters of the Great Recession of 2008 to 2009, will likely alter the balance of global economic power,” the IEA said. “Prices around $100 are weighing down an already-fragile macroeconomic and financial situation in the OECD.”
Global oil consumption will increase 1.2 million barrels a day, or 1.3 percent, annually over the next five years, the IEA said. That’s 700,000 a day more than the agency’s last forecast for 2010 to 2015 in December and will leave a “fairly thin” cushion of spare production capacity, it predicted.
“This expected rise in demand will be the consequence of sustained economic growth,” concentrated in Asia, the Middle East and Latin America, according to the IEA.
Price Assumption
The group raised its price assumption by $15 to $20 a barrel from last year’s report. It expects nominal oil prices to stay above $100 a barrel for the next five years.
Worldwide oil production capacity is set to accelerate 1.1 million barrels each year to 100.6 million a day by 2016, the agency said. That compares with 93.8 million last year.
Capacity among members of the Organization of Petroleum Exporting Countries will likely expand to 37.85 million barrels a day in 2016 from 35.72 million barrels a day in 2010, largely because of higher production in Iraq, Angola and the United Arab Emirates, the IEA said.
Libyan production, which was curtailed this year by armed conflict, will recover gradually from 2012. The IEA doesn’t expect the country to pump full volumes of about 1.6 million barrels a day until 2015.
Iraq will increase oil output capacity by 1.5 million barrels a day to 4.1 million by 2016, it said.
Non-OPEC supplies will be boosted to 55.4 million barrels a day in 2016, versus 52.7 million barrels in 2010.
“The outlook for non-OPEC supply growth has improved due to sustained investment on the back of high oil prices and moderate success at slowing mature field decline,” the IEA said. “Combined with higher output from Canadian oil sands, Brazilian deepwater and Colombian crude, the Americas now contribute virtually all incremental non-OPEC oil supply.”
To contact the reporter on this story: Lananh Nguyen in London at lnguyen35@bloomberg.net
To contact the editor responsible for this story: Stephen Voss on sev@bloomberg.net
