In its monthly Oil Market Report published today, the International Energy Agency (IEA) said that global oil demand in 2007 will increase at almost double last year’s pace based on increasing demand in China and the Middle East.
The IEA raised its assessment of demand growth in 2006 to 84.5 million barrels per day, and sees demand in 2007 reaching 86.0 million barrels per day. Despite a milder-than-normal start to winter, 4Q06 world demand was 1.3 million barrels per day higher than a year earlier.
China’s consumption reached 7.1 million barrels per day in 2006, and the agency now expects it to grow to 7.6 million barrels per day in 2007—an increase of 6.1% compared to its prior forecast of 5.4% growth. This lifts non-OECD demand growth to 3.6% in 2006 and 3.2% in 2007.
Total OECD industry oil inventories fell by 40.2 million barrels b in December, as the fall in crude exceeded product stock builds despite a temperate start to winter in the US and Europe. Forward demand cover fell by one day from end-November to 53 days.
January OPEC crude supply fell by 180,000 barrels per day from December to 30.2 million barrels per day. The ‘call on OPEC crude and stock change’ is revised up to 30.6 million barrels per day for 2007 versus 30.3 million barrels per day in 2006 and remains above existing OPEC production. Additional OPEC-10 supply cuts could markedly tighten the market.
Separately, the annual survey published today by the UK Offshore Operators’ Association (UKOOA) suggested that oil and gas output from the North Sea fields would be about 10% lower over the next few years than previously thought.
UKOOA said that 2006 production of oil and gas was down 9% to 2.9 million barrels of oil equivalent—the lowest level since 1992—and down from a peak of 4.5 million barrels of oil per day in 1999. Oil accounts for about 65% of the total UK production.