Weak economic outlook slows demand for oil

Gurjit Degun
21 August 2014

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21 August 2014 | Gurjit Degun

Demand for oil is expected to rise by 1 million barrels per day (mb/d) this year, which is less than anticipated following lower-than-expected deliveries in the second quarter.

The International Energy Agency’s (IEA’s) Oil Market Report (OMR) put the lower expectations for a rise down to the International Monetary Fund's weaker outlook for economic growth. But added that as the economy improves next year, demand is set to increase by 1.3 mb/d.

The Organization of the Petroleum Exporting Countries’ (OPEC) crude oil supply rose by 300,000 barrels per day in July, a five-month high. The IEA said this was pushed by a boost from Saudi Arabia to 10 mb/d and a “tentative recovery in Libyan output more than made up for declines in Iraq, Iran and Nigeria”.

The OMR said the global oil supply increased by 230 kb/d in July, to 93 mb/d, “with higher OPEC output countering slightly lower non‐OPEC supply”. Compared with July 2013, global supplies rose 840 kb/d, as a 1.2 mb/d increase in non‐OPEC supplies more than offset a 360 kb/d decline in OPEC output, the report added.

“Global refinery activity saw diverging trends in June,” the report said. “A counter‐seasonal fall in OECD throughputs contrasted with record highs in key non‐OECD countries. The OMR estimated second-quarter global refinery runs at 76.5 mb/d, 1.3 mb/d more than a year earlier and 0.2 mb/d higher than in the previous OMR. Projections for the third quarter remain unchanged at 77.8 mb/d.”

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