Global demand growth in 2005 is revised slightly down - IEA

The International Energy Agency (IEA) reports that unusually warm weather and hurricane-related disruptions temporarily reduced OECD demand in September and October. This was partly offset by an 8.6% increase in Chinese apparent demand in September as monthly gasoline exports fell sharply. Global demand growth in 2005 is revised down by 0.070 mbd to 1.20 mbd and by 0.090 mbd to 1.66 mbd for 2006. 

The flexibility of the world refining system was demonstrated as OECD refinery throughputs rose 0.059 mbd year-on-year in September to 38.5 mbd. Increases of 427 mbd in Europe and 0.625 mbd in the Pacific more than offset the hurricane-induced fall of 993 mbd in North America

OECD total industry oil stocks held relatively flat in September, closing at 2645 mb, or 61 mb above that of a year ago. Stock builds were centred on crude in Europe, distillates stocks in the Pacific and gasoline in the U.S. These were, however, offset by draws elsewhere. Forward demand cover by industry stocks fell to 52 days from 53 days in August. 

October global oil supply rose by 0.865 mbd to 84.4 mbd on increases from North America, the North Sea, Former Soviet Union (FSU) and Brazil. 0.740 mbd of U.S. Gulf of Mexico capacity was offline in early November, with full recovery likely to take many months. Non-OPEC supply growth averages 0.180 mbd for 2005 and 1.3 mbd in 2006 (plus 0.3-0.4 mbd of OPEC other liquids). 

OPEC crude supply remained at 29.6 mbd in October as increases from Iran and Kuwait offset a 0.220 mbd decline from Iraq. OPEC capacity reached 31.8 mbd and could attain 33 mbd by end-2006 with increases mainly in lighter, sweeter crude. The fourth quarter call on OPEC crude and stock change averages 29.6 mbd, and 28.3 mbd in 2006. 

Benchmark crude prices weakened in October. Cash and futures prices for West Texas Intermediate (WTI) and Brent closed below USD 60/bbl. Weaker product prices, notably gasoline, led the decline. As such, refining margins fell sharply throughout October in the U.S., pressured further by returning capacity. European and Asian margins were more stable but broadly weaker. 

More information from the IEA monthly report can be obtained from Erik Ranheim  

Contact: Erik Ranheim