In its August report on the global oil market, OPEC forecasts that demand growth for crude will grow by 900,000 barrels a day in 2012, unchanged from July’s report. The cartel is less certain about next year:
There is considerable uncertainty surrounding the forecast for world oil demand growth in 2013, which remains unchanged at [800,000 barrels/day]. However, risks are currently seen to be skewed to the downside. …
Given the summer driving season, the heat and the shutdown of Japanese nuclear power plants, world oil demand has overcome the earlier notion of declining momentum and moved to a more stable trend. Oil use in the US, Japan and India has been growing for various reasons. Furthermore, demand in non-OECD countries is gaining some strength. The only exception is European demand, which continues its downward trend.
OPEC noted the temporary suspension of the U.S. biofuel blending mandate as a result of drought-damaged crop, but the cartel does not see the cut-off as boosting overall demand. U.S. consumption rose 1.9% in May, the first rise in 13 months. Consumption in Europe’s four largest economies (Germany, France, Italy and the United Kingdom) has fallen by 1.7% since 2011.
The cartel’s demand growth forecast for 2013 could be cut by 20% next year according to the report. The really bad news for crude exporters is that those cuts would be accompanied by stagnant prices that would lower the revenue stream to exporting nations.
OPEC’s forecast for supply growth in non-OPEC countries in 2012 calls for an increase of 690,000 barrels a day to a total of 53.18 million barrels a day, an upward revision of 120,000 barrels a day. North American supply growth is estimated at 0.89%, or 16.4 million barrels a day, in 2012. U.S. supply growth is the largest of any non-OPEC nation at 700,000 barrels a day.
OPEC’s own crude production fell by 160,000 barrels a day in July, with the biggest drop coming from Iran, down 173,000 barrels a day. Iraqi production, however, increased by 115,200 barrels a day, the highest growth among OPEC members by a factor of 3.
Overall, global supply was just 50,000 barrels a day higher in July than in June, averaging 89.43 million barrels a day. OPEC’s share of that production was 35%.
The August Monthly Oil Market Report is available here.
Paul Ausick
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