IEA cuts oil demand forecast

The International Energy Agency trimmed its oil demand forecast for this year as the weak global economy and the impact of Hurricane Sandy in the US weighed on crude consumption.

The IEA, the industrialised countries' energy watchdog, said the poor economic backdrop - and particularly weakness in Europe - was continuing to restrain oil demand growth. More News From Financial Times
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US to be world's top energy producer The agency cut its demand forecast for the last quarter of this year by a sizeable 290,000 barrels a day to 90.1 million barrel per day. It said demand for the whole year would grow by 670,000 barrel per day - 60,000 barrel per day less than assumed last month. Next year, it would increase by 870,000 b/d to a total of 90.4m b/d - 100,000 b/d less than in last month's forecast. The downbeat assessment highlights how worries about the economic outlook - with the International Monetary Fund predicting that the global economy will grow by just 3.3 per cent this year and 3.6 per cent in 2013 - are weighing on oil markets. Growing pessimism about China and the eurozone, and concern about the looming fiscal cliff in the US, pushed oil futures down to four-month lows in early November. But the IEA also drew attention to a series of glitches that have cut supply from some of the world's largest oil-producing areas. "Rarely have so many things gone wrong in the oil patch at the same time," the agency said on Tuesday in its closely watched monthly oil market report. It said mishaps from Brazil to Yemen had cut crude supply from non-Opec countries by a substantial 1.3m b/d in the third quarter of this year, while expanded international sanctions erased more than 1m b/d of Iranian exports. In the US, Hurricane Sandy cut off oil product supplies to the East Coast, with bottlenecks forcing parts of New Jersey and New York to ration petrol for the first time since the 1970s. Despite the disruptions, global oil supply rose by 800,000 barrel per day in October, to 90.9m barrel per day. The IEA said there was a slight decline in supplies from Opec, the producers' group, but that was offset by a rebound in the Americas and the North Sea. Iranian production rose a little last month, reversing a seven-month downtrend. Markets were generally well supplied, the IEA said. The report comes a day after the agency predicted that the US would overtake Saudi Arabia as the world's largest oil producer by 2017, as the shale revolution unlocks vast new reserves of "tight" oil.