IEA Lowers Oil Demand Estimates; OPEC Stands Pat

Commodities & Metals

Published: August 9, 2013 7:30 am

Last Updated: April 27, 2020 11:27 pm

The International Energy Agency (IEA) today lowered its oil demand growth forecast from 930,000 barrels a day in 2013 to 900,000 barrels a day and cut demand growth for 2014 from its previous estimate of 1.2 million barrels a day to 1.1 million barrels a day. The IEA said it cut its 2014 forecast following lowered GDP growth estimates from the International Monetary Fund. The IEA now sees oil demand of 90.8 million barrels a day in 2013 and 91.9 million barrels a day in 2014.

In its oil market report published today as well, the Organization of Petroleum Exporting Countries (OPEC) essentially left its July estimates unchanged. The cartel estimated that demand growth in 2013 would total 800,000 barrels a day, rising to demand growth of 1.04 million barrels a day in 2014. Total global demand in 2013 is estimated at 89.7 million barrels a day, rising to 90.75 million barrels a day in 2014.

The U.S. Energy Information Administration earlier this week boosted its estimate of global consumption by 200,000 barrels a day to 1.1 million barrels a day in 2013. The agency’s estimate of consumption growth in 2014 remained unchanged at 1.2 million barrels a day in 2014. The EIA estimates total global consumption of 89.99 million barrels a day in 2013 and 91.21 million barrels a day in 2014.

Like OPEC and the EIA, the IEA is counting on substantial growth in North American production. The EIA raised its estimates for U.S. crude oil production by 100,000 barrels a day for this year and next, to an average of 7.4 million barrels a day this year and 8.2 million barrels a day in 2014. If that happens, the United States 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. The IEA’s estimate for 2013 is about half a million barrels a day higher than either OPEC or the EIA, and about 1 million barrels a day higher in 2014.

For some reason, the IEA thinks the global economy is going to improve faster than do OPEC and the EIA. The agency might be right, but it’s a long shot.