Global thirst for oil will be slightly stronger than expected in the last quarter of 2012 because of demand from China and despite a sharp cutback in Europe recently.
The IEA forecast that the growth of demand next year is expected to be relatively sluggish against a background of tepid growth of the global economy and despite signs that Chinese sentiment has turned mildly positive.
The International Energy Agency raised its estimate for global demand in the last three months of the year by 435,000 barrels per day to 90.5 million barrels per day. This was despite latest European data indicating the steepest contraction of demand in the Q3 since the financial crisis of 2008 to 2009.
The IEA, the energy arm of the Paris based Organization for Economic Cooperation and Development grouping 34 advanced economies, said that five of the 10 biggest oil consuming countries in the world were now countries outside the OECD area.
The United States remained the biggest consumer accounting for 18.2 million barrels per day nearly twice as much as number two China which consumed 9.8 million barrels per day. But Brazil, Russia and India and Saudi Arabia were 4 of the next 5 biggest users of oil. Like China, they are all non OECD member states. Japan ranked third, consuming 4.4 million barrels per day.
The top 10 consumers accounted for about 60% of global demand in September. OECD countries together accounted for about 50%. The growth of global demand in 2013 was now put at 865,000 barrels per day taking consumption to 90.5 million barrels per day or 110,000 barrels per day more than forecast last month. This outlook remained based on expectations that the global economy would grow by 3.3% in 2012 and by 3.6% in 2013 as estimated by the International Monetary Fund.
The IEA stressed in its monthly review of the oil market that beneath the surface of apparently calm trading conditions, tectonic changes were taking place in the structure of energy markets adding to uncertainty. The market was undergoing almost violent structural change on two fronts.
These were an apparent acceleration in the eastward shift of global oil demand growth. And the second was accelerating globalization of the refining industry. End user markets are globalizing. No longer is refining a local industry. Exports are what’s driving throughputs in Europe and the US in the face of local demand contraction.”
The IEA said that until recently the largest product importer, the US has become the world’s second largest exporter after Russia which recently hit record high runs. India, another product exporter is also on the rise.
The agency said that global demand had risen to 90 million barrels per day in the Q3 and that it was raising its forecast for the Q4 by about 435,000 barrels per day from the level foreseen last month to about 90.5 million barrels per day. The revision had been driven by unexpectedly strong deliveries of products in Mexico in October and signs of stronger implied demand in China together with surprisingly robust data for Germany.
This latest estimate meant that the growth of global demand in 2012 from the level in 2011 would amount to about 850,000 barrels per day or 0.9% an increase of 70,000 barrels per day from the estimate made last month. But the agency also highlighted that demand from OECD countries in Europe plummeted by 895,000 barrels per day YoY in the Q3 to 13.8 million barrels per day.
It said that this was the steepest contraction in OECD European demand since the onset of the 2008 to 2009 financial crisis and apparently resulted from the combination of near record product prices and a weak economy.
