IEA sees oil supply exceeding demandOil supply will outstrip an acceleration in demand growth next year as production outside of OPEC expands at the fastest pace in 20 years, the International Energy Agency predicted.
World oil consumption will climb by 1.2 million barrels a day next year, up from 930,000 a day in 2013, the IEA said in its first monthly report with forecasts for 2014.
Supplies from outside the Organization of Petroleum Exporting Countries will jump by 1.3 million barrels a day amid booming output in North America, shrinking the need for crude from the 12-member producer group, according to the report. The assessment should “give bulls some cause for alarm,” the Paris-based adviser to oil-consuming nations said. “While demand growth is also forecast to pick up momentum,” this “will still fall short of forecast non-OPEC supply growth.”
Brent crude has lost about 2 percent this year, trading today near $109 a barrel on the London-based ICE Futures Europe exchange, as economic stagnation in Europe, slowing expansion in China and threats to recovery in the U.S. constrain fuel consumption.
Dependence on OPEC is dwindling as new drilling techniques enable the United States and Canada to unlock reserves from rock formations deep underground.
Global demand will average 92 million barrels a day in 2014, advancing by 1.2 million barrels a day, or 1.3 percent, from this year, according to the IEA report.
The agency said the forecast hasn’t yet incorporated a reduction to 2013 economic growth estimates made Tuesday by the International Monetary Fund. The Washington-based IMF trimmed its projection for global growth this year to 3.1 percent, from 3.3 percent.
The agency boosted its estimate for demand in 2013 by 220,000 barrels a day from last month’s report, estimating that oil use will expand by 930,000 barrels a day, or 1 percent, to 90.77 million a day this year.
The revision, the third increase to the 2013 outlook to be made this year, was driven by unusually cold weather in the second quarter.
“It’s a balanced outlook for the next year, and growth is likely to increase,” Eugen Weinberg, head of commodities research at Commerzbank AG in Frankfurt, said before the IEA report was released. “The million-dollar question is what is going on with non-OPEC supply.” Bloomberg
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