While the price of oil pushed back up toward $50 a barrel, the IEA worried in its latest Oil Market Report if suppliers would be able to keep up with demand if demand growth in 2005 exceeded expectations.
According to the IEA, world oil supply averaged 84.4 million barrels per day (mbpd) in December, a slight dip of 45 kbpd from November, the bulk of the fall coming a decline in non-OPEC output. The IEA is maintaining its demand estimate for 2004, but has slightly raised its estimate of expected demand growth in 2005 to 1.44 mbpd.
That forecast demand growth is much less than the 2.65 mbpd growth experienced in 2004—but the forecast may be too conservative.
Fourth-quarter demand was stronger than expected in North America, Europe and China but weaker in OECD Asia, India and the FSU. Growth is set to slow in 2005, but will still be led by China and non-OECD Asia.
The report noted a major increase in Chinese demand in November. Previous months had seen something of a slackening of the rapid pace of expansion earlier in the year but November’s apparent demand of 6.72 mbpd set a new record and was up 16% year-on-year.
Meanwhile, in the US, the most recent data fom the EIA shows that imports of oil increased 4.5% for the four week ending 7 Jan 05 from the same period last year.
For 2005, the IEA has also slightly reduced its forecast for the growth in oil supply from non-OPEC producers. Even in the base forecast scenario for 2005, the global market’s reliance on OPEC continues to increase.
On a related note, Saudi Arabia, the world’s largest producer, sold a record $106 billion of oil last year as prices and output rose. (Bloomberg) That was at an average price of $35/barrel. Just imagine what that figure might be at the end of 2005.