IEA curbs crude oil demand forecast for 2011, 2012

Due largely to flagging economies in the industrialised world, especially in Europe, the International Energy Agency (IEA) said Tuesday that demand for crude oil is expected to be lower for all of 2011 and into 2012, but prices still remain bullish for geopolitical reasons. Oil demand this year is now expected to average 89 million barrels per day (mb/d), up 700,000 b/d from 2010, but down 200,000 b/d on earlier projections. At the same time, demand is expected to rise by 1.3 mb/d in 2012 to reach 90.3 mb/d, also down 200,000 b/d, an IEA report said. Meanwhile, supply is estimated in 2011 to have risen 900,000 to 90 mb/d from October to November, but this figure was down due to maintenance work in certain non-OPEC producers. The IEA noted that \"unplanned\" outages on non-OPEC production centres would mean practically no growth in non-OPEC supply this year, but that this situation would be reversed in 2012, when non-OPEC output is projected to rise by 1.0 mb/d. OPEC supply in November \"rose to the highest level in more than three years, \" up by 620,000 to 30.68 mb/d, with Saudi Arabia and Libya accounting for 80 percent of the increase,\" the report said. \"In the shorter term, we note the convergence of our own expectations for the 2011/2012 market balance with those generated by colleagues at the OPEC Secretariat. Month/to/month fluctuations aside, both reports point towards an average underlying \'call on OPEC crude and stock change\' that lies above 30 mb/d for 2012,\" it added. The \"call on OPEC crude and stock\" currently stands at 30.2 mb/d, the Paris-based IEA said in its \"Monthly Oil Market Report.\" The IEA also noted that geopolitical tensions, especially the threat of an oil embargo on Iran by some industrialised countries, were propping up prices in an otherwise weaker market affected by the prospect of tepid or no economic growth in Europe. OECD industry oil stocks declined in October by a steep 36.3 million barrels to 2.630 billion barrels, or 57.2 days of forward cover. Revised medium-term projections show global oil demand rising from 88.3 mb/d in 2010 to 95.0 mb/d in 2016, with average growth of 1.1 mb/d per year, the report also remarked. \"Our preliminary medium-term update suggests a more comfortable market outlook than looked likely six months ago. The demand baseline has come in lower for 2011 and a marginally weaker economic prognosis persists into 2012, even if this is countered by slightly weaker assumed prices,\" the IEA said.