Global oil demand to outgrow decline

2010 demand level is 86.4 million b/d in the most recent Medium-Term Oil Market Outlook, compared with the 84.3 million b/d projection a year ago. That additional “wedge of demand” relative to the expectations of a year ago translated to an increase in the expected call on the Organization of Petroleum Exporting Countries’ crude in 2010 of about 1.1 million b/d, “once the relative outperformance of non-OPEC supply over the period is accounted for.”

That additional demand “proved critical in keeping OPEC on an even keel in terms of market management,” said Horsnell. “Indeed, the level of OPEC supply has been more or less flatlining since last August. OPEC output was 100,000 b/d lower last May compared with the August 2009 level according to the US Energy Information Administration and 200,000 b/d higher according to the IEA. In all, pretty much flat and totally under control for 9 months would appear to be the best description of OPEC output.”

Year-over-year demand patterns for Asia-Pacific and North American members of OECD continue to improve sequentially. “The laggard is of course Europe, which continues to follow a divergent demand pattern to the rest of the OECD. When the rest of the OECD was very weak in the first half of 2009, European oil demand was relatively robust, but when demand in the rest of the OECD recovered, the European readings weakened,” Horsnell said. “The year-over-year fall in European oil demand in April is put at 704,000 b/d, leaving the overall rise in OECD demand at 193,000 b/d. That is the second straight month of year-over year demand growth in the OECD, and the last time that happened was January 2006.”

Oil & Gas Journal