International Energy Agency Sees Weakening Oil Demand In Light Of Lower GDP Growth

The International Energy Agency (IEA) “trimmed” estimates of world oil demand growth in 2013 and 2014 in response to lower GDP forecasts by the International Monetary Fund (IMF) in July, Platts reported Friday.

"Projections of global oil demand growth for 2013 and 2014 have been trimmed slightly following lower macroeconomic forecasts released by the International Monetary Fund (IMF) in July," the IEA said.

In its monthly oil market report, the IEA lowered its global demand growth by 30,000 barrels of oil per day for 2013 and 100,000 barrels of oil per day for 2014.

However, the IEA signaled that there would be a short demand growth in the third quarter due to an increase in global refinery output by 3.1 million barrels of oil per day, the highest monthly increase on record.

Though there was an increase in demand for June and July the IEA warned that current markets are not a precursor for future trends., adding that refinery demands are likely to come back down after this month.

"Runs have risen faster than end-user demand, leading to exceptionally large and early builds in product inventories and reduced refining margins. A heavy maintenance schedule looms in the fall," it said.

The report said that China’ oil demand growth in 2013 was left unchanged at 3.7 percent, even though there were signs of slowdown in the Chinese economy.

Japanese demand forecasts had been curtailed, which reflects weak June economic data and expectations of an accommodating stance on nuclear power, IEA said.

Non- Organization of the Petroleum Exporting Countries (OPEC) supplies increased by 575,000 barrels of oil per day in July to reach 91.85 million barrels of oil per day.

IEA said that North America provided 40 percent of the non-OPEC supplies in July, mostly coming from Canada rather than the U.S.

Fourth quarter non-OPEC supply is expected to reach 55.4 million barrels of oil per day however due to political risks in the Middle East production growth may fall.

Meanwhile, OPEC member countries crude oil supply were down 165,000 barrels of oil per day to 30.41 million barrels of oil per day due to disruptions in Libya.