IEA adjusts global oil demand upwards - IEA

In its 13 November Oil Market Report, IEA has adjusted global oil demand growth for 2003 upwards by 0.17 mbd to 1.3 mbd and projected global oil demand growth for 2004 upwards by 0.02 mbd to 1.1 mbd. Not surprisingly China contributed almost 35% of oil demand growth this year and is projected to account for 30% of next year’s increase in oil demand.

In addition to positive growth signs from the US, the Japanese and European economies are also expanding faster than expected. While uncertainties still exist, however, indicators point to an acceleration of world economic growth. It is this trend that has led IEA to adjust its oil demand forecasts. Oil demand for 2003 is now set at 78.6 mbd and for 2004 at 79.6 mbd. If it weren’t for China, though, oil demand would have remained rather flat. However, questions on China’s robust economic growth must be asked. The Chinese economy will need to expand at a rapid pace if new jobs are to be created to absorb workers displaced from inefficient and defunct state enterprises and for China to position itself for full WTO entry. In addition, factors concerning the sustainability of China’s huge economic growth, and the environmental and social impacts of this growth, must be taken into account. Nevertheless, IEA estimates that Chinese oil demand will grow by 9% in 2003 and by 6% in 2004.

Compared to US, European and Japanese crude oil imports of 9.4 mbd, 12.5 mbd and 4.6 mbd respectively for 2003 to date, Chinese crude oil imports of about 1.6-1.7 mbd for 2003 are still relatively modest, although they have increased by 70% compared to 2001.

Looking at the quarterly oil demand development ahead, as seen in the graph below, IEA estimates the 4th quarter of 2003 at 80.6 mbd, up 1.4% over the same quarter in 2002. The first quarter next year is forecast to be almost as strong at 80 mbd, but will experience the usual seasonal fall to 77.5 mbd in the second quarter. Altogether oil demand for each quarter of 2004 is expected to be slightly above that for the corresponding quarter of 2003.

Based on the estimated growth in world oil demand and the announced increases in non-OPEC oil production, the “call” for OPEC crude oil for 2004 will be 0.8 mbd lower than for 2003 totalling 25.1 mbd on average for the year. The seasonal fall expected in the 2nd quarter of 2004 will be the largest for some time. The “call” on OPEC oil will be lower for every quarter of 2004 compared to that for 2003 except for the 4th quarter of 2004, when the “call” is estimated at 26.5 mbd, almost the same as for the 4th quarter of 2003.

If the trend for Opec oil movements is downwards, the trend for FSU movements is upwards. FSU seaborne exports in October were 0.29 mbd higher than for October 2002, virtually the whole increase being crude from the Baltic Sea. Seaborne product exports were slightly down compared to October 2002. So far in 2003 the FSU oil exports have amounted to 5.18 mbd, compared to 4.48 mbd in 2002 and 3.62 mbd in 2001. Since 2001 Black Sea exports have increased by 0.88 mbd and Baltic Sea oil exports by 0.68 mbd.

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