Global oil consumption will contract less than previously forecast this year and grow strongly in 2010, the developed countries’ energy watchdog said on Thursday, in the latest sign of surging economic optimism.
The Paris-based International Energy Agency (IEA) said it detected “growing evidence that the global economy may be finally stabilising”. But it added: “The spectre of a double-dip, W-shaped recession . . . cannot be entirely discounted.”
The IEA now expects global oil demand to drop 1.9m barrels a day this year, less than the 2.3m b/d it had forecast last month. It is the third revision since May, when it forecast a contraction of 2.6m b/d. The upward revision of 700,000 b/d over the past four months is equivalent to Qatar’s oil output.
“The recent economic rebound has been essentially due to the completion of the massive inventory adjustment triggered by last year’s financial panic on the one hand, and to substantial government intervention on the other, more than to the revival of sustained private demand, which remains feeble,” the IEA said.
Highlights of the latest Oil Market Report:
Global oil demandis revised up nearly 0.5 mb/d for both 2009 and 2010, to 84.4 mb/d and 85.7 mb/d respectively, mostly on stronger-than-expected data in OECD North America and non-OECD Asia. The global economy is stabilising, but OECD demand is poised to remain weak for the remainder of this year, while seemingly strong non-OECD demand may be obscured by Chinese stock building.
August global oil supplywas down 400 kb/d from July to 84.9 mb/d, on lower non-OPEC output. Total non-OPEC estimates for 2009 and 2010 are unchanged versus last month, averaging 51.0 mb/d in 2009 and 51.5 mb/d in 2010. OPEC NGL averages 5.2 mb/d and 6.1 mb/d respectively.
OPEC crude oil supplyin August was up 55 kb/d at 28.8 mb/d. OPEC-11 output rose by 80 kb/d to 26.3 mb/d, or 1.4 mb/d over target. OPEC met in Vienna as this report went to press, with discussions on better compliance seemingly more likely than a further target cut. The ‘call on OPEC crude and stock change’ is revised up to 28.3 mb/d for 3Q09 and to 27.9 mb/d in 4Q09 on the more robust demand forecast.
Global refinery crude run projections for 3Q09are also revised up this month to 72.1 mb/d, an increase of 0.2 mb/d from last month’s report, due to higher demand estimates and a lower US hurricane adjustment. Nonetheless, runs remain pressured by poor refining margins.
OECD industry stocksrose by 12.8 mb in July, to 2,778 mb, 4.6% above last year’s level. Middle distillate increases in all three regions, particularly North America, outweighed a decrease in both gasoline and fuel oil stocks. End-July forward demand cover was unchanged versus June at 61.8 days.
Benchmark crude oilprices rose $7/bbl on average in August, to around $71-73/bbl. Arguably, prices have tested limits and trade in a $68-74/bbl price range for now. Future price direction will hinge partly on how long the distillate overhang persists.
Key World Energy Statistics 2009
Gorgon, one of the world’s most ambitious and costly natural gas projects, is due to be given the official go-ahead next week, when Chevron approves an investment of about A$42bn (€25bn) in the project off western Australia.
On Wednesday, Chevron, the second biggest US oil company, announced that Australian subsidiaries signed three binding long-term Sales and Purchase Agreements (SPAs) for Chevron's share of liquefied natural gas (LNG) from the Gorgon project. The agreements are for a total supply of nearly 3 million tons per annum (MTPA) of LNG to Osaka Gas, Tokyo Gas, and GS Caltex.
Chevron will supply Osaka Gas 1.375 MTPA of LNG for 25 years. Osaka Gas will also purchase 1.25 percent equity in the Gorgon Project. Tokyo Gas will be supplied 1.1 MTPA over 25 years and will purchase a 1 percent equity stake. Supply from both agreements is expected to commence in the second half of 2014.
