Mubasher: The International Energy Agency (IEA) on Friday scaled back its outlook oil demand consumption this year, citing deteriorating prospects for world trade, despite stimulus measures and developing countries should support growth through next year.
The IEA downgraded its demand growth forecast by 100,000 to 1.2 million barrels per day (bpd), whereas it projected a growth of 1.4 million bpd for next year.
“The main focus is on oil demand as economic sentiment weakens,” the energy watchdog said in its monthly oil report.
The forecast was based on the assumption that the tariffs levied by the US and China on one another’s goods last year would remain in place. However, the projection did not take further US levies imposed last May into account.
The sluggish demand growth in the first half of the year was ascribed to a slump in the petrochemicals industry in Europe, warmer than usual weather conditions in the northern hemisphere and stalled gasoline and diesel consumption in the US.
However, “stimulus packages are likely to support growth in the short term,” the IEA said.
In addition, key central banks have either put brakes on monetary policy tightening or slowed down the pace of rate hikes, which should boost growth in the second half of this year and the next year, the Paris-based added.
On the supply front, US sanctions against Iran and Venezuela, supply restraints led by the Organization of the Petroleum Exporting Countries (OPEC), fighting in Libya and attacks on two crude carriers in the Gulf of Oman added uncertainty, according to the IEA.
Iran’s oil output slumped by 210,000 bpd last May to 2.4 million bpd, its lowest levels since the war with Iraq in the 1980s, while exports dropped by 480,000 bpd to 810,000 bpd.
Meanwhile, a surge in US production, with higher output from Brazil, Canada and Norway would raise non-OPEC supply to 1.9 million bpd this year and 2.3 million bpd next.
By 10:04 am GMT, US Nymex crude futures dropped by 0.69% to $51.92 per barrel (bpd), while global benchmark Brent futures fell by 0.54% to $60.98 pb.
