PARIS: The International Energy Agency trimmed its outlook for oil demand over the next 18 months and highlighted threats to the dominance of Opec, in a report yesterday.
The IEA said that new data on the difficulty the global economy is having in picking up speed meant that demand for oil would grow by slightly less than it had foreseen in July. But the critical underlying factors are the rise of North American shale energy and the threat this poses to Opec, the IEA said, referring to debate over whether Opec may have had its day.
The agency said that it was trimming its forecast for growth of global oil demand this year by 30,000 barrels per day to 895,000 barrels per day because the International Monetary Fund had lowered its forecast for growth of the global economy from 3.3 percent to 3.1 percent.
The speed at which oil demand would pick up next year had also been reduced to 1.1m b/d from 1.2m b/d because economic growth now looked like being 3.8 percent instead of 4 percent.
However, US demand had risen firmly in the first six months, but in the long term was expected to edge down, whereas production of shale oil and gas was rising fast. In the first six months of the year, US demand had shown the strongest growth since the first quarter of 2011.
In London the price of Brent North Sea oil rallied by 72 cents to $107.40 per barrel on firm data for the Chinese economy.
The IEA forecast in November that the United States could become the biggest oil producer, ahead of Saudi Arabia, by 2017, and spoke in May of a shale energy “shock” to energy markets.
Yeserday, it said that in July non-Opec oil supplies had risen by 570,000 b/d to 54.9m b/d “with North America providing around 40 percent of the growth”.
The agency also spotlighted a dilemma for the Opec. The global supply of oil rose by 575,000 b/d per day in July from the figure for June to 91.8m b/d, and by 785,000 b/d on a 12-month basis. But the monthly increase was accounted for by the rise of supplies from outside Opec.
Opec oil production fell by 165,000 b/d to 30.41m b/d “due to supply disruptions in Libya where civil unrest continues to derail exports”, even though Saudi Arabia had increased its supplies by 150,000 b/d to a 12-month high of 9.8m b/d.
But Opec also raised production of natural gas liquids, which are akin to crude oil, by 175,000 b/d.
The IEA also reported that output by Iraq fell below 3m b/d for the first time for five months and exports were expected to plunge by about 500,000 b/d from September owing to work on infrastruture at southern ports. Meanwhile attacks on the “key” northern pipeline were sharply reducing exports from Kirkuk.
It also spotlighted violence, unrest or tension in Algeria, Nigeria, Egypt and Syria. These factors largely explained a rise in the price of benchmark West Texas Intermediate to a 16-month high level in July.
“Many commentators are questioning its implications for the future of Opec,” the IEA wrote. Opec would have to cut its supplies under pressure from shale oil “unless falling prices curb shale oil production first”.
But at the moment, Opec’s main problem is “in bringing production to market”. Opec’s production last month “was down 1.1m b/d on the year” mainly owing to “domestic developments in some member countries”. AFP
