IEA: Global Oil Demand Growing at Fastest Pace in Five Years

By Brad Kramer August 13, 2015 View Profile

Global oil demand in 2015 is expected to grow at its fastest pace in five years. The International Energy Agency (IEA) released its latest monthly “Oil Market Report” on Aug. 12, projecting demand to grow by 1.6 million barrels per day (bpd), up 200.000 bpd from the agency’s previous report.

The IEA attributes the rise in demand to economic growth solidifying and consumer response to lower oil prices. Persistent macroeconomic strength supports above-trend growth of 1.4 million bpd in 2016, the report shows.

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World oil supply fell nearly 600,000 bpd in July, mainly on lower non- OPEC output. OPEC crude production held steady at near a three-year high, the IEA reports. As lower prices and spending cuts take a toll, non-OPEC supply growth is expected to slow sharply from a 2014 record of 2.4 million bpd to 1.1 million bpd this year and then contract by 200,000 bpd in 2016.

OPEC crude supply inched 15,000 bpd lower in July to 31.79 million bpd as Saudi Arabia output eased and offset record high Iraqi production and increased Iranian flows. The “Oil Market Report” predicts that the “call on OPEC crude and stock change” will rise to 30.8 million bpd in 2016, up 1.4 million bpd on this year due to a stronger demand outlook and stalling non-OPEC supply growth.

OECD inventories rose counter-seasonally by 9.9 million barrels to hit another all-time high of 2.916 billion barrels in June with their surplus to average levels widening to a record 210 million barrels, the IEA reports. As the seasonal restocking of “other products” continued apace, refined products by end-month covered 31.3 million bpd of forward demand, 0.2 days above end-May.

Global refinery runs reached a record 80.6 million bpd in July, 3.2 million bpd up on a year earlier, but fissures are showing. High distillate stocks have pushed cracks in Singapore down to their lowest level since 2009 and prompted run cuts in Asia. Elsewhere, especially in the United States, still-soaring gasoline cracks supported high margins and throughput.

View the report online at IEA website.