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Page added on July 11, 2014
Oil Demand Rising Fastest Since 2010
Global oil demand will rise at the fastest pace in five years in 2015 as China leads gains in emerging economies, the International Energy Agency said.
World oil consumption will increase next year by 1.4 million barrels a day, the agency said in its first monthly report to assess 2015. The rate of growth will be the fastest since 2010. It’s also higher than a projected increase of 1.2 million a day in supplies from outside the Organization of Petroleum Exporting Countries, the agency said.
Demand growth will be led by China and other countries outside the 34-member Organization of Economic Cooperation and Development. While oil has retreated in the past month as threats to supplies in Libya and Iraq abate, prices will stay supported near historically high levels as risks in the region “remain extraordinarily high,” the agency said.
“The global economy is still expected to gain momentum in 2015,” said the Paris-based IEA, which advises most OECD nations on energy policy. “The oil outlook for 2015, unveiled here in detail for the first time, also does not suggest any letup in market conditions.”
Brent crude futures slipped 2.3 percent this year as Libya aims to restore supplies curbed by political protests, concerns fade that Iraq’s output will be reduced by an Islamist insurgency, and production in the U.S. nears its highest in three decades. Global gross domestic product will expand by 3.9 percent next year, up from 3.6 percent in 2014, according to the International Monetary Fund.
World Demand
World oil demand will climb 1.5 percent to a record 94.1 million barrels a day in 2015, as growth in emerging economies compensates for a contraction in developed nations, the IEA said. Many developing economies “are entering a stage of development where rising household incomes and expanding industrial activity typically fuel relatively fast oil consumption growth,” according to the report.
Chinese demand will increase by 440,000 barrels a day in 2015, or 4.2 percent, to 10.87 million a day, as government support keeps economic growth above 7 percent, the agency predicted.
OPEC Call
The need for OPEC’s crude will decline to an average of 29.8 million barrels a day in 2015, or 100,000 a day less than this year, as the group produces more natural gas liquids. The IEA forecasts the amount of crude needed from the organization, rather than the level it will provide. OPEC’s output of NGLs will increase by 300,000 barrels a day next year to 6.7 million a day.
Non-OPEC producers, led by the U.S., will bolster production by 1.2 million barrels a day, or 2.1 percent, to 57.5 million a day next year.
The agency lowered global demand estimates for this year, by 130,000 barrels a day, amid signs the pace of economic recovery slackened in the second quarter. Consumption will increase by 1.2 million barrels a day this year to average 92.7 million a day.
Global markets are currently going through a “a soft patch” at a time when demand typically climbs, because of subdued purchases in Europe, China and developed nations in Asia, according to the agency.
Inventory Gain
Inventories of crude and refined oil products in developed nations rose by more than normal in May, by 44.2 million barrels to 2.64 billion. As a result, the deficit compared with the five-year seasonal average narrowed to 69.6 million barrels from 106.1 million.
Output from OPEC’s 12 members slipped by 40,000 barrels a day last month to 30.03 million a day because of losses in Iraq, the IEA said. Production in Iraq, the group’s second-biggest member, fell to 3.17 million barrels a day from 3.42 million a day following the halt of the Kirkuk oilfield as Islamist militants captured towns in the country’s northwest.
Saudi Arabia, the group’s biggest member and de facto leader, “barely hiked production in June,” a sign that “crude markets are already well-supplied,” according to the report. The kingdom’s output rose 70,000 barrels a day to 9.78 million a day last month.
Demand for the organization’s supplies in the second half of this year is estimated at 30.6 million barrels a day, about 600,000 a day more than OPEC pumped in June.
Brent futures for August settlement slipped 40 cents to $108.27 a barrel on the London-based ICE Futures Europe exchange as of 10:53 a.m. local time.
8 Comments on "Oil Demand Rising Fastest Since 2010"
Pops on Fri, 11th Jul 2014 11:51 am
Always next year, LOL
Actually in the Brent Price game I predicted this year would see demand really ratchet up and cause the price to pop to $130-something.
I thought part of it would be RE, Blackstone bought up 40k distressed properties, rented them out and sold trances to the fools who didn’t learn last time. They are flailing already with a big vacancy rate and have earned a crappy reputation in several markets.
Norm on Fri, 11th Jul 2014 8:02 pm
Always more demand. But no more supply.
Makati1 on Fri, 11th Jul 2014 9:41 pm
Demand is shrinking in the West as incomes shrink. Demand is growing in the East as incomes are still growing there.
Bloomberg numbers are nothing more than sales gimmicks for their news. Rarely any real news or actual statistics not manipulated to cyclone speeds.
Davy on Sat, 12th Jul 2014 6:47 am
Article said “crude markets are already well-supplied,”
This is the standard response to KSA when their production does not increase for whatever reason yet we know their production in aggregate has probably plateaued or peaked considering the quality of crude and expense of producing
Article said “Global oil demand will rise at the fastest pace in five years in 2015 as China leads gains in emerging economies, the International Energy Agency said.”
China is in a financial crisis at the moment and there is no guarantee they will grow demand if anything Chinese demand growth will be slowing. There is already reports of 5% growth rates behind the manufactured statistics. China is a “smoke and mirrors” country when it comes to statistics.
Article said “The global economy is still expected to gain momentum in 2015,” said the Paris-based IEA, which advises most OECD nations on energy policy. “The oil outlook for 2015, unveiled here in detail for the first time, also does not suggest any letup in market conditions.”
I would like to know why it is only the lobby of plenty and cornucopian that get there outlook and reports through claiming gain, momentum, and increases. I am seeing multiple indications of a slowdown and a stagnation. Growth is of the manufactures sort and related to massive debt creation, leverage, and market speculation. There is no indication of real growth in the traditional sense.
Mak said “Demand is shrinking in the West as incomes shrink. Demand is growing in the East as incomes are still growing there.”
Typical simpleton Mak answer. Mak, can you elaborate on your obviously fuzzy unbalanced portrayal of the global economy. Or is this just another pump up the east and beat down the west Mak attack?
shortonoil on Sat, 12th Jul 2014 10:31 am
Bloomberg is probably correct about one part of this article. Demand is likely to increase a little in 2015, but it won’t be because the economy is improving. There are two forces driving increasing demand at this stage:
1) The quality of petroleum is declining, so it takes more of it to drive the same economic activity. Using the volume of petroleum consumed as an indicator of its value is like comparing pounds of food consumed instead of its calories. Any cow can tell you that corn has a greater value to them than hay. Harvard could use a few “old Neils” teaching in its economics department.
2) The cost of production is increasing, so the petroleum industry is using more of its own production to produce it products. Between 2014 and 2015 we calculate that the demand from the petroleum industry will increase by 2.4% per unit of product. The petroleum industry itself is now the largest user of petroleum, and its products on the planet. That situation will only get worse as time progresses.
The increasing demand for petroleum is not an indication of an improving economy. At this point on the depletion curve it is an indication of a declining economy. Of course it is unlikely that any Harvard trained economist will ever understand this. They never spend much time working down on the farm!
http://www.thehillsgroup.org/
Nony on Sat, 12th Jul 2014 10:57 am
KSA and OPEC love having 100/bbl instead of 40. They could supply more. The don’t out of choice. Cartel action.
Davy on Sat, 12th Jul 2014 11:08 am
Short, wonderful point. It amazes me TPTB make policy decisions based upon flawed data.
Northwest Resident on Sat, 12th Jul 2014 11:46 am
“The petroleum industry itself is now the largest user of petroleum and its products on the planet.”
If you think about it, that one fact and the many realities that derive from it just about says everything you need to know about how deep BAU is in the doo-doo.