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PARIS: Tension on oil markets is set to ease early next year amid a
US slowdown, the International Energy Agency (IEA) forecast on
Thursday, noting strong output by OPEC this year.
The agency said despite uncertainty on the
length of the US downturn, demand in advanced countries seemed to be
on a weaker trend although it forecast a global increase in demand
of 1 percent next year.
“Superficially the risks to demand appear to
be on the downside,” it added.
But the agency cautioned that demand for oil
would remain robust in Asia, the Middle East and Latin America,
fueled by vibrant economic momentum and continued low fuel prices.
On the supply side of the equation, the agency
found that production by the Organization of Petroleum Exporting
Countries (OPEC) in the last nine months is “well ahead” of the
same period last year.
Supplies by non-OPEC producers are seen
remaining strong in late 2008 and rising next year.
“There is potential for the current tightness
[on oil product markets] to start to ease slightly in third quarter
2008, but that may be overly optimistic,” the agency said.
But it noted that supply and demand tensions
were unlikely to ease until weather risks from the 2008 to 2009
winter had diminished.
“In other words, both crude and middle
distillate markets may see some respite in the second half of 2008,
but more likely by early next year.”
Global demand for oil is expected to come to
87.7 million barrels a day next year, an increase of 1 percent from
the level of 86.9 million barrels a day forecast for 2008 and
roughly the same percentage rise from 2007 to what is foreseen this
year. This rate of increase is slightly less than the increase
during the oil price boom in recent years.
Demand this year was seen rising by a slight
80,000 barrels a day.
In the oil-thirsty advanced economies, demand is
projected to average 48 million barrels a day in 2009, a decline of
1.2 percent from 2008.
The contraction in demand is pronounced in the
United States, where according to the International Energy Agency
demand should decline by 2.8 percent this year and 1.9 percent in
2009, partially in response to high fuel prices.
A different picture emerges outside the
industrialized countries grouped in the Organization for Economic
Cooperation and Development (OECD). Demand in these developing
economies is seen growing at about 3.8 percent in 2008 and 2009.
China for example should see demand increase 5.6
percent in 2008 compared with that of 2007 and at a roughly similar
pace in 2009.
The market for crude oil is also expected to
remain strong in the Middle East and Latin America.
The report found that despite recent moves in
Asia and elsewhere to curb fuel subsidies, “retail prices in many
countries continue to be much lower than international levels.”
The report found that while demand would
strengthen in 2009, driven largely by economically booming non-OECD
nations, supply—especially by OPEC—has been strong this year.
That suggested that once the 2008 to 2009 winter is over, market
tensions could diminish.
The International Energy Agency pointed to gains
in global oil supply in June, largely from OPEC and in particular an
increase to just under 9.5 million barrels a day in Saudi Arabian
output and rebound in Iranian production to 3.8 million barrels a
day.
OPEC supply in June, excluding Ecuador, was 1.8
million barrels a day higher than in June 2007.
But Nigeria suffered interruptions due to
political unrest, which limited output to 1.9 million barrels a day.
The agency, which seeks to coordinate energy
policy among industrialized nations, said that over the next five
years growth in demand for crude oil would be sustained.
While producing and consuming countries agree
that expansions in oil industry infrastructure are needed,
“producers are . . . wary of signing any ‘blank check’ as
regards future capacity expansion until the likely extent and
duration of any global economic slowdown can be gauged . . .
“Notwithstanding a potential easing in 2009,
this could keep underlying levels of spare capacity tight for some
time to come.”
-- AFP
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