November 22, 2008

IEA cuts global supply growth forecast

According to the International Energy Agency, global oil supplies are forecast to grow more slowly than expected over the next 5 years, taking spare capacity to ‘minimal levels’ in 2013, despite weaker demand growth.

IAE in its latest Medium Term Oil Market Report said that it has cut its supply forecast by 2.7 million barrels per day to 95.33 million barrels per day in 2012, with output from non OPEC countries expected to be 1.4 million barrels per day lower than previously thought at 50.68 million barrels per day. Non OPEC supply is expected to reach 51.1 million barrels per day in 2012, up from 49.9 million barrels per day in 2008.

IAE said that declining output from maturing oilfields, as well as delays and cost overruns at new sites would lead to lower than expected growth in supplies. Global demand is projected to rise an average 1.6% per annum or 1.5 million barrels per day, until 2013, but supply growth would drop to 1 million barrels per day from 2010. Some 90% of the demand growth is expected to come from Asia, South America and the Middle East, reflecting rising wealth and growing populations. However, higher prices and slower economic growth is expected to impact global demand. Spare capacity is set to rise from 2.5 million barrels per day in 2008 to over 4 million barrels per day in 2009 before falling in 2013 to about 1 million barrels per day.