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IEA sees strong demand in 2014, non-OECD overtaking OECD

Emerging markets will once again lead oil demand growth in 2014, with surging North American production helping to meet record consumption

Global oil demand will rise by 1.2 million barrels a day (b/d) in 2014 bolstered by continued strong growth in emerging markets and an improved global economy, the International Energy Agency (IEA) said.

The IEA said global oil demand will reach an average of 92m b/d in 2014, up from an 90.8m b/d this year.

This demand growth will be driven by a stronger macroeconomic backdrop, the IEA said. In April the International Monetary Fund said global GDP growth would be 4% in 2014, up from 3.3% in 2013. The IEA, though, included the caveat that “given the current state of the world economy... particularly heightened risks surround forecasts of both economic progress and oil consumption.”

In the fourth quarter of 2014 the IEA expects global oil demand to reach 93.1m b/d, up from a forecast of 91.9m b/d in the fourth quarter this year.

Emerging markets are expected to lead demand growth in 2014. For the first time, non-OECD oil consumption is expected to overtake OECD demand, marking a major shift in the global oil market. Non-OECD demand is forecast to average around 46.5m b/d in 2014, up by 1.4m b/d (or 3.1%) year-on-year. This is compared to average OECD demand of 45.5m b/d next year.

China is again expected to be the main driver of demand growth in 2014. Consumption is expected to increase by 385,000 b/d in 2014, though the rate of growth is clearly slowing. China’s oil demand is expected to grow by 3.7% this year and 3.9% next year, down from the 5% growth rate seen in recent years. Demand in other non-OECD Asian countries and the Middle East is also expected to show strong growth, rising by 325,000 b/d and 225,000 b/d respectively.

The IEA said falling oil demand in the OECD region is expected to slow next year, edging down by 0.4% in 2014 compared to the 0.8% decline of 2013. Expectations of stronger economic growth next year will help to curb the fall in demand, the IEA said.

North America leads supply growth

With the help of surging output from North America’s tight oil and oil sands deposits, non-Opec production is expected to grow by 1.3m b/d in 2014, the highest level in 20 years, the IEA said.

Global oil supplies, though, fell by 300,000 b/d in June, to 91.2m b/d, because of lower Opec output.  Disruptions in Libya, Nigeria and Iraq cut Opec crude oil supplies by 370,000 b/d in June, to 30.61m b/d, the IEA said.

US tight oil production has helped prop up global output this year, and North America is expected to be the only source of growth in 2013, the IEA said. In 2014, US crude output is forecast to increase by 530,000 b/d and Canada’s oil sands production is expected to rise by 140,000 b/d.

Last month the IEA said it expected the "call on Opec" crude to be 29.8m b/d in the second half of 2013, 200,000 b/d lower than previously expected, because of easing demand. Opec rolled over its 30m b/d production ceiling at its 31 May meeting in Vienna. Opec’s said in its latest oil market report that it expects demand for its crude will decline by 300,000 b/d next year, or around 2.6%, to 29.6 million b/d, in spite of higher global demand. The forecast seems to confirm fears expressed by some member states that they are losing market share to new North America production.

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