IEA downgrades oil demand again

According to the International Energy Agency (IEA), world oil supply declined by 0.845 million barrels daily (mbd) in September to 83.8 mbd. Hurricanes have shut in 1.2 mbd of U.S. Gulf crude production, prompting a 0.3-0.4 mbd downward revision to non-OPEC supply for 2005 and 2006. Non-OPEC supply growth is estimated at 0.170 mbd in 2005 and 1.3 mbd in 2006 - in addition to OPEC NGL growth of 0.4 mbd each year.  

OPEC crude supply rose by 0.1 mbd in September to 29.8 mbd following increases from Iraq and Kuwait. OPEC spare capacity remains below 2.0 mbd. OPEC attempts to make this available may be frustrated by a lack of demand for heavy, sour crude. OPEC capacity should increase by 0.5 mbd by end-year and further in 2006. 

The IEA says that regional economic and logistical disruptions (particularly Hurricanes Katrina and Rita) as well as retail price spikes had a substantial impact on September demand. October should be less affected as logistical disruptions subside. Global demand growth is revised down by 0.09 mbd to 1.26 mbd for 2005, but should rebound to 1.75 mbd in 2006. 

OECD total industry oil stocks fell by 3.5 mb in August. Crude inventories were little changed with offsetting moves in Europe and North America. Product inventories saw draws in gasoline largely balanced by increases in distillates. Forward demand cover by industry stocks held steady at 54 days, two days above last year. 

Contact: Erik Ranheim