IEA Cuts World Oil Outlook to 84.7 Million Barrels/Day
The key forecast for global oil demand has been revised down by 570,000 barrels/day to 84.7 million barrels/day for 2009 by the International Energy Agency (IEA) following a downward full-year world economic growth forecast to 0.5% by the International Monetary Fund (IMF). Demand in 2008 was 85.7 million barrels/day, down from 86 million barrels/day in 2007.
“Not only will the two-year contraction in oil demand be the first since the early 1980s,” says a new IEA report issued in Paris, “but 2009’s decline will also be the largest since 1982.” The report, e-mailed today to Purchasing.com, suggests that government efforts to prop their economies, such as the economic stimulus package, actually will reduce oil demand in the near future.
MarketWatch.com quotes the report as saying that “while current OPEC supply curbs will eventually begin to clear the onshore stock overhang, significant volumes of 'floating' oil could dampen any upward price momentum in the short term.”
As available monetary policy tools have been exhausted, “efforts to prop up stricken economies have moved to the political arena, as evidenced by the announcement of multiple, competing fiscal stimulus packages,” the report says. “Herein lies the greatest source of uncertainty ahead: A lack of effective international policy coordination could potentially fuel protectionism and curb global trade. This would aggravate the current downturn, postpone recovery well beyond 2010 and further depress global oil demand.”
According to preliminary IEA data, oil product demand in North America plummeted by 5.4% year-on-year in December, falling for the twelfth month in a row. Persistent demand weakness in the U.S. (-6% year-on-year) was compounded by losses in both Canada (-2.3%) and Mexico (-2.4%), as both countries followed their neighbor into recession. So, looking ahead, 2009 North American demand is expected to be 23.7 million barrels/day, a decline of 2.7% from the 24.3 million barrels/day of 2008.
Looking just at the U.S., the EIA report says “the decline in oil demand has to be expected, given the extent of the U.S. economic downturn.” Even with the $800 billion or more fiscal stimulus package, the IMF says the GDP rebound won’t gain momentum until 2010 and probably will take two years for the economy to return to its growth trend of around 2-3%. So, the EIA sees U.S. oil demand around 19.5 million barrels/day in 2009, down from an estimated 20.5 million in 2008.
The downward revisions in projected 2009 gross domestic product (GDP) underscores to EIA economists the extreme weakness of the global economy, the slowdown in industrial activity and an unavoidable slippage in oil consumption. The IMF’s latest forecast puts GDP growth at negative 1.7% in the 30-nation Organization for Economic Co-operation and Development (OECD). Non-OECD nations will show just 3.4% growth in GDP, the IMF forecasts.
“Not only will the two-year contraction in oil demand be the first since the early 1980s,” says a new IEA report issued in Paris, “but 2009’s decline will also be the largest since 1982.” The report, e-mailed today to Purchasing.com, suggests that government efforts to prop their economies, such as the economic stimulus package, actually will reduce oil demand in the near future.
MarketWatch.com quotes the report as saying that “while current OPEC supply curbs will eventually begin to clear the onshore stock overhang, significant volumes of 'floating' oil could dampen any upward price momentum in the short term.”
As available monetary policy tools have been exhausted, “efforts to prop up stricken economies have moved to the political arena, as evidenced by the announcement of multiple, competing fiscal stimulus packages,” the report says. “Herein lies the greatest source of uncertainty ahead: A lack of effective international policy coordination could potentially fuel protectionism and curb global trade. This would aggravate the current downturn, postpone recovery well beyond 2010 and further depress global oil demand.”
According to preliminary IEA data, oil product demand in North America plummeted by 5.4% year-on-year in December, falling for the twelfth month in a row. Persistent demand weakness in the U.S. (-6% year-on-year) was compounded by losses in both Canada (-2.3%) and Mexico (-2.4%), as both countries followed their neighbor into recession. So, looking ahead, 2009 North American demand is expected to be 23.7 million barrels/day, a decline of 2.7% from the 24.3 million barrels/day of 2008.
Looking just at the U.S., the EIA report says “the decline in oil demand has to be expected, given the extent of the U.S. economic downturn.” Even with the $800 billion or more fiscal stimulus package, the IMF says the GDP rebound won’t gain momentum until 2010 and probably will take two years for the economy to return to its growth trend of around 2-3%. So, the EIA sees U.S. oil demand around 19.5 million barrels/day in 2009, down from an estimated 20.5 million in 2008.
The downward revisions in projected 2009 gross domestic product (GDP) underscores to EIA economists the extreme weakness of the global economy, the slowdown in industrial activity and an unavoidable slippage in oil consumption. The IMF’s latest forecast puts GDP growth at negative 1.7% in the 30-nation Organization for Economic Co-operation and Development (OECD). Non-OECD nations will show just 3.4% growth in GDP, the IMF forecasts.
By Tom Stundza -- (source:www.purchasing.com)
