LONDON - World oil demand growth is likely to slow down more sharply than previously estimated in the next few years due to the economic downturn, the International Energy Agency said on Friday.
Global oil demand is expected to grow by 220,000 barrels per day (bpd) in 2009 to average 86.37 million bpd, the IEA, which advises 28 industrialized countries, said in its Medium-Term Oil Market report.
It gave its previous forecast, for growth of 350,000 bpd, in a monthly report on November 13.
The cut is the latest in a series of downward revisions in response to evidence that the global economy is weaker than previously thought and to the surge in oil prices earlier this year to a record high above $147 a barrel.
"The economic downturn and the impact of the sharp rise in prices during 2007 and 2008 have dragged down overall levels of demand," the Paris-based IEA said in the report.
"Consequently, these forecasts result in significant downward revisions."
Global refined oil product demand is expected to grow by 1.2 percent on average, or about 1 million bpd, every year between 2008 and 2013, from 86.2 million bpd to 91.3 million bpd, the IEA said.
That is less than the agency's previous medium-term forecast issued in July, which projected demand would grow 1.6 percent, or 1.5 million bpd, every year for the five-year period.
Oil use in the Organization for Economic Co-operation and Development (OECD) group of industrialized countries is expected to fall from 47.8 million bpd to 46.8 million bpd by 2013, or 200,000 bpd a year on average.
While consumption in developed countries will fall, emerging markets such as China and the Middle East will remain the drivers of demand growth.
REFINING OUTLOOK
Oil prices have fallen more than $100 a barrel since reaching a record high of $147.27 a barrel in July, dragged lower by the gloomy economic outlook and weakening oil demand.
U.S. crude traded as low as $42 a barrel on Friday, the lowest in nearly four years.
The report from the IEA also focused on the outlook for the oil refining industry and supply of fuels, such as gasoline and diesel.
It said slow demand would boost surplus oil-refining capacity and spare crude oil production capacity in the Organization of the Petroleum Exporting Countries (OPEC), easing any strain on supplies. Continued
Effective spare OPEC oil capacity would rise substantially to approach 5 million bpd in 2010, largely due to the economic slowdown, it said.
And new investment in oil refineries is expected to add 8 million bpd of crude oil distillation capacity by the end of 2013, outpacing growth in demand.
The IEA also said values of middle distillate fuels, such as diesel, heating oil and jet fuel, were likely to sustain their significant premium to gasoline over the medium term.
"Demand growth, though significantly lower than forecast in the July 2008 Medium-Term Oil Market Report, remains heavily biased toward middle distillates," the agency said.
In contrast, gasoline and naphtha's values, or cracks, to crude oil will be weak, due to sluggish demand and excess supply potential.
Fuel oil's differentials to crude are expected to narrow and even move into positive territory in the medium term.
Global oil demand is expected to grow by 220,000 barrels per day (bpd) in 2009 to average 86.37 million bpd, the IEA, which advises 28 industrialized countries, said in its Medium-Term Oil Market report.
It gave its previous forecast, for growth of 350,000 bpd, in a monthly report on November 13.
The cut is the latest in a series of downward revisions in response to evidence that the global economy is weaker than previously thought and to the surge in oil prices earlier this year to a record high above $147 a barrel.
"The economic downturn and the impact of the sharp rise in prices during 2007 and 2008 have dragged down overall levels of demand," the Paris-based IEA said in the report.
"Consequently, these forecasts result in significant downward revisions."
Global refined oil product demand is expected to grow by 1.2 percent on average, or about 1 million bpd, every year between 2008 and 2013, from 86.2 million bpd to 91.3 million bpd, the IEA said.
That is less than the agency's previous medium-term forecast issued in July, which projected demand would grow 1.6 percent, or 1.5 million bpd, every year for the five-year period.
Oil use in the Organization for Economic Co-operation and Development (OECD) group of industrialized countries is expected to fall from 47.8 million bpd to 46.8 million bpd by 2013, or 200,000 bpd a year on average.
While consumption in developed countries will fall, emerging markets such as China and the Middle East will remain the drivers of demand growth.
REFINING OUTLOOK
Oil prices have fallen more than $100 a barrel since reaching a record high of $147.27 a barrel in July, dragged lower by the gloomy economic outlook and weakening oil demand.
U.S. crude traded as low as $42 a barrel on Friday, the lowest in nearly four years.
The report from the IEA also focused on the outlook for the oil refining industry and supply of fuels, such as gasoline and diesel.
It said slow demand would boost surplus oil-refining capacity and spare crude oil production capacity in the Organization of the Petroleum Exporting Countries (OPEC), easing any strain on supplies. Continued
Effective spare OPEC oil capacity would rise substantially to approach 5 million bpd in 2010, largely due to the economic slowdown, it said.
And new investment in oil refineries is expected to add 8 million bpd of crude oil distillation capacity by the end of 2013, outpacing growth in demand.
The IEA also said values of middle distillate fuels, such as diesel, heating oil and jet fuel, were likely to sustain their significant premium to gasoline over the medium term.
"Demand growth, though significantly lower than forecast in the July 2008 Medium-Term Oil Market Report, remains heavily biased toward middle distillates," the agency said.
In contrast, gasoline and naphtha's values, or cracks, to crude oil will be weak, due to sluggish demand and excess supply potential.
Fuel oil's differentials to crude are expected to narrow and even move into positive territory in the medium term.
