Top economies get clever with oil, IEA says
The report said that a measure of global dependency on oil, the oil intensity ratio, would decline by 2.6 percent next year.
Tue, Jul 13, 2010 at 08:32 AM
OIL CATASTROPHE: The report forecast a fall in production of 30,000 barrels per day from the Gulf of Mexico in 2010-2011 owing to the effects of the BP oil spill disaster. (Photo: Gregory Bull/AP)
The world is raising its overall game in the use of oil, with advanced economies reducing dependence through changes in consumption, opening a window of price stability, the IEA said on Tuesday.
Increased economic activity in advanced economies is no longer matched by a commensurate rise in oil consumption the International Energy Agency said, pointing to an 18-month window of probable stability on the oil market.
"Markets in 2011 may prove 'not too hot, not too cold'," the International Energy Agency said.
"Whisper it quietly, but we might, just might, be in for some market stability for a while longer."
The overall outlook suggested "a market balance remaining relatively comfortable through mid 2011, but with tightening market fundamentals possible from the second half of next year."
The IEA said it was assuming that the oil price next year would average $79.40 per barrel. In London, the benchmark price of oil eased slightly on Tuesday to $74.65 a barrel.
It also said that a measure of global dependency on oil as an input for a given level of production, the oil intensity ratio, would decline by 2.6 percent next year.
High oil prices and then the huge economic downturn curbed demand sharply in the last two years.
The IEA said that now, as the global economy heads for growth of 4.1 percent this year and 4.3 percent next year, "greater efficiency, saturation and interfuel substitution more than outweigh the impact of economic growth on oil demand," in OECD countries.
A telling example is a rapid switch in Germany, the biggest European user of heating fuel, to home boilers which used low-sulphur fuel and raised efficiency by 15-20 percent.
"North America will cease to act as an engine of demand growth in the OECD as the 2010 economic rebound ... fades. This region's oil demand decline will compound the fall expected in Europe and the Pacific."
Oil demand in the United States was set to fall by 0.5 percent to 18.9 million barrels a day in 2011, after growth of 1.0 percent in 2010.
Economic recovery in Europe might be threatened by austerity drives in Germany, France and Britain.
But even if a setback or a "double-dip" recession were averted, and expected "relative strong" growth of 1.9 percent materialised, European "oil demand will continue to decline in 2011."
China would account for 30 percent of the rise in global demand next year from about half this year.
Growth of Chinese demand remained a key factor, and appeared to have risen by 9.5 percent in May on a 12-month comparison, but this was sharply lower than recent growth of 17.4 percent and pointed towards a "gentle slowdown" in the second half of this year as the government attempts to cool down the economy."
The IEA repeated unease about the quality of statistics from China, saying that if the oil figures were correct "this could suggest that GDP (growth) readings may be inflated."
The agency, the energy strategy arm of the Organisation for Economic Cooperation and Development, held its forecasts for growth of global oil demand this year largely unchanged at 86.5 million barrels per day, showing an increase of 1.8 mbd or 2.1 percent from 2009.
The rate of growth in demand would then slow down in 2011 to 1.3 million barrels per day or 1.6 percent, to a total of 87.8 mbd.
Next year, "growth will be driven entirely by non-OECD countries," it said, to the extent of 1.6 mbd or 3.8 percent.
And new supply is coming increasingly from outside the Organisation of Petroleum Exporting Countries.
Expansion of OPEC's oil capacity was expected to falter up to the end of next year.
The agency said that its "relatively relaxed" view of market fundamentals at least until the middle of next year hinged on continuing, if slower, growth of non-OPEC supply.
The report forecast a fall in production of 30,000 barrels per day from the Gulf of Mexico in 2010-2011 owing to the effects of the BP oil spill disaster, but also said this would be more than offset by an increase in output in 2011 of 55,000 barrels per day.
It estimated roughly that the total of oil spewed into the sea so far as a result of the Deepwater Horizon well disaster was 2.3-4.5 million barrels.
Regarding sanctions against Iran for its nuclear programme, the IEA said they were already driving up fuel prices and were "casting doubt on the republic's ability to source the full volumes required."
The sanctions were "expected to have a material impact on the country's energy industry." it said.
Copyright 2010 AFP Asian Edition