Growth in global oil demand continues to stagnate as world economic conditions fail to broadly improve, despite a sharp decline in oil prices, the International Energy Agency (IEA) said in a report Friday.
"Macroeconomic weakness continues to restrain global oil demand growth, with fourth quarter 2014 deliveries estimated (at) just 0.6 million barrels per day (mbpd) above year earlier levels. Despite lower prices, demand growth is only forecast to accelerate...
0.9 mb/d in 2015, unchanged since last month's Report," the IEA indicated.
For all of 2014, demand is expected to average 92.4 mbpd, up only 620,000 barrels, or 0.7 percent, on 2013 levels. This represents a five-year low in the progression of oil demand growth and coincides with a sharp decline in demand in the European and Asian areas of the OECD industrialised nations' group.
In 2015, demand growth is forecast to be 1.0 percent over 2014, with total average demand pegged at 93.31 mbpd next year.
The IEA said that the current change in market fundamentals could be "a milestone" in the history of oil markets, and even though prices could evolve, "markets may never be the same" in the future.
"Steep drops in crude prices are only providing a limited boost to demand, as the price decline is itself partly demand driven," the report noted, but also stressed the US is "a notable exception." The Paris-based Agency, also pointed to a "continued collapse" of oil prices in January, with Brent Crude last trading at USD 48.40 per bbl and WTI at USD 47.75 per bbl.
Predictions for non-OPEC oil supply growth have been scaled back by 350,000 b/d, due to the lower prices. The previous non-OPEC supply growth was projected to be 950,000 b/d and is now put at 600,000 b/d.
OPEC output rose 80,000 b/d in December to reach 30.48 mbpd, following a surge in Iraqi production which compensated for losses in Libyan supply.
The "call" on OPEC crude is now forecast at 29.80 mbpd, just below the target level set by the producer organisation, which has been set at 30.00 mbpd.
OECD inventories now stand at 2.697 billion barrels, down 8.7 million barrels from a month earlier. Preliminary data shows a stock build of 12.5 million barrels for OECD reserves in December.