Global oil demand to slip, then steady in 2013

Weak economic growth and high oil prices are likely to contain global oil demand in 2012 and cap it in 2013, the International Energy Agency said on Wednesday. "The pace of oil demand growth is expected to remain relatively steady over the next 18 months, with annual gains of just 0.8 million barrels per day in both 2012 and 2013," the agency said in its latest Oil Market Report. "This modest growth rate reflects the combined effects of sluggish global economic activity, historically elevated oil prices and global improvements in energy efficiency." With Brent futures indicating that prices would remain above $100 in 2012 before dipping to just below $99 in 2013, the persistently high prices are giving consumers an incentive to cut consumption. "This is best encapsulated by the rapid decline in global oil intensity, which is forecast to fall by 2.3 percent in 2012 and 2.5 percent in 2013, a greater decline rate than the previous 15 year average of 2.2 percent," said the agency. Oil intensity is a measure of the role of oil in the overall mix of energy supplies. With the growth of the global economy expected to be merely 3.3 percent in 2012 and 3.6 percent in 2013, the weak macroeconomic backdrop is also expected to cap oil demand growth, the IEA said. The IEA, an offshoot of the Paris-based Organisation for Economic Cooperation and Development, was created as a result of the oil crises of the 1970s to monitor energy markets, advise OECD countries on energy policy and to oversee strategic oil reserves. Europe showed the weakest growth trend as it struggles with a public debt crisis, with demand seen declining 2.6 percent in 2012, the IEA observed. Asian OECD countries are expected on the other hand to post growth of 3.3 percent on the back of Japanese nuclear outages. However a gradual recovery of nuclear capacity in Japan is expected to reduce demand for oil in Asia, leading to a decline of 1.9 percent in 2013, while a "more robust European economic outlook in 2013, with GDP (gross domestic product) growth of 0.8 percent", would result in a modest decline of 1.3 percent for the region.