Demand recovery eyed as supplies edge up
Global demand has been increasing steadily, with gains expected by the IEA
Tentative signs of a demand recovery have emerged with the turn of the year. Having bottomed out in 2014, global oil demand has been expanding steadily, with year-on-year gains estimated at around 1 million barrels a day (b/d) for the first quarter 2015, data from the International Energy Agency (IEA) showed.
At the same time global supply rose by 1.3m b/d year-on-year to an estimated 94m b/d in February, led by a 1.4m b/d gain in non-Opec producers. Declines in the US rig count have yet to dent North American output.
Opec crude output edged down 90,000 b/d to 30.22m b/d in February, as losses in Libya and Iraq offset higher supply from Saudi Arabia, Iran and Angola. A slightly higher demand forecast has raised the call on Opec crude to 30.3m b/d for the second quarter 2015, above the group’s official 30m b/d target.
The demand growth forecast for the whole of 2015 has been increased by 75,000 to 1m b/d, bringing global demand to an average 93.5m b/d, underpinned by a long anticipated global macroeconomic uptick.
But the global oil demand forecast maintains a cautious air to it, warned the IEA, as a relatively persistent gloom hangs over China and many net oil-exporting economies, while the European Central Bank recently launched a quantitative easing campaign, signalling all is not rosy in Europe.
Chinese oil demand remains somewhat subdued, as relative macroeconomic weakness dampens demand despite numerous recent government price cuts.