International Energy Agency cuts oil demand forecast

Paris, France - The International Energy Agency (IEA) cut its forecast for oil demand growth on Tuesday, saying recovering oil prices and a mild early winter were weighing on crude purchases.

In a monthly report, the Parisbased body said it had revised down its demand forecasts for both this year and next by 0.1mn barrels per day (bpd). Oil demand is now projected to rise by 1.5mn bpd in 2017 and by 1.3mn bpd in 2018, representing annual increases of 1.6 per cent and 1.3 per cent, respectively.

Crude oil markets are expected to be oversupplied in the current quarter and going into 2018, the IEA said.

Increased oil production from countries not in the OPEC cartel had helped push global output higher in October, the report said.

Output by OPEC alone, however, fell as Algeria, Iraq and Nigeria pumped less, taking the cartel’s production to its lowest level since May.

Meanwhile events in Saudi Arabia, OPEC’s kingpin, ‘have added extra momentum to the rally that has driven Brent crude prices from lows of US$45 per barrel in late June to around US$63 per barrel recently’, the IEA said. Saudi concerns added to the impact of supply disruption in Iraq and lower output in Algeria, Nigeria and Venezuela to push prices higher. Oil producers who signed up to a landmark production cut agreement mostly stuck to the deal, with the compliance rate at 96 per cent in October, and 87 per cent for the year to date, the IEA also said.

The IEA said ‘supply disruptions, geopolitical concerns, a growing expectation that the OPEC/non-OPEC output accord will be extended through 2018 at the end of the month, and with demand growth still robust, largely explain firmer prices’. Hurricane Harvey contributed to a sharp decline in industry stocks held in developed nations in the Organisation for Economic Cooperation and Development, the IEA said, adding this contributed to worldwide oil stocks seeing a quarterly decline for only the second time in the past two years.