IEA Weighs In on Oil Market, Crude Oil Futures

In its oil market report published yesterday, the Organization of Petroleum Exporting Countries (OPEC) estimated that demand growth in 2013 would total 800,000 barrels a day, rising to demand growth of 1 million barrels a day in 2014. Total global demand in 2013 is estimated at 89.7 million barrels a day, rising 90.7 million barrels a day in 2014.

The U.S. Energy Information Administration on Tuesday estimated that global consumption would rise by 900,000 barrels a day in 2013 and by 1.2 million barrels a day in 2014. The EIA estimates total global consumption of 90.05 million barrels a day in 2013 and 91.29 million barrels a day in 2014.

Like OPEC and the EIA, the IEA is counting on substantial growth in North American production. The EIA estimated that the United States would produce an average of 7.3 million barrels a day this year, rising to 8.1 million barrels a day in 2014. If that happens, the U.S. and Canada will account for the lion’s share of supply growth both this year and next.

All three estimates are in the same (big) ballpark — around 90 million barrels a day this year and 91 million barrels a day next year, with about 80% of the growth in supply coming from North America. Can that be achieved? Probably. Can growth of 1 million barrels a day be sustained for years? That is less certain. But barring any really nasty supply-side shocks, this year and next look solid.