The International Energy Agency said today that oil demand will fall for a second year in 2009, the first back-to-back contraction since 1983.
The energy adviser to 28 industrialised countries including Ireland, cut its 2009 forecast by 1 million barrels a day on expectations the International Monetary Fund will lower its economic growth outlook. The IEA estimates global consumption will shrink 0.6 percent to 85.3 million barrels a day.
In New York, WTI (West Texas Intermediate) is trading at $34.59, down 81 cents on the New York Mercantile Exchange.
The following is a summary of the IEA's monthly Oil Market Report:
Forecast global oil demand in 2009 is reviseddown by 1.0 mb/d, following a halving of assumed GDP growth to 1.2%, given the worsening outlook. Global oil demand is now projected at 85.3 mb/d in 2009 (‑0.6% or -0.5 mb/d year-on-year). The 2008 estimate is revised down 70 kb/d to 85.8 mb/d (-0.3% or -0.3 mb/d versus 2007). The expected two-year contraction in oil demand would be the first since 1982 and 1983.
Global oil supply was flat in December at 86.2 mb/d, with curbed OPEC output offset by gains elsewhere. Non-OPEC supply for 2008 and 2009 is forecast at 49.5 mb/d and 50.0 mb/d, lowered by 60 kb/d and 30 kb/d versus last month’s report. 2008 output declined by 150 kb/d, partly due to the first fall in Russian supply since 1996. 2009 growth is forecast at 0.5 mb/d, in addition to a 0.6 mb/d increment in OPEC NGLs.
December OPEC crude supply was 30.9 mb/d, down 330 kb/d versus November. This was 1 mb/d below September 2008 levels, and nearly 2 mb/d below mid-2008 highs. OPEC agreed a new target of 24.8 mb/d from January, equivalent to OPEC-13 output of 28.2 mb/d versus a reduced 2009 ‘call’ of 29.5-30.0 mb/d.
1Q09 global refinery throughput is forecast at 72.3 mb/d,1.2 mb/d lower than last month’s report. Weaker global demand and poor economics continue to hamper crude runs. Evidence of more structural changes to the refining industry is emerging in addition to reduced plant operation rates.
OECD industry stocks fell by 2.0 mb to 2,658 mb in November, as a US build was offset by lower European crude and Pacific distillates. Despite a downward revision to October data, end-November forward demand cover remains high
at 56.4 days on lower OECD demand. Preliminary December data indicate an OECD draw of 8.0 mb.
Crude oil prices roseto nearly $50/bbl in early January, supported by cold weather, the Russian/Ukrainian gas crisis and fighting in Gaza. Subsequently, weak global refinery demand and an increasing crude overhang have pressured Brent futures to currently around $45/bbl, while WTI was at $35/bbl, distorted by record-high Cushing stocks.
