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Bloomberg
Global oil demand growth is slowing. That is the view of all three major oil forecasting organisations, who have cut their assessments for what they expect in terms of an increase in crude consumption this year.
The latest outlooks from the International Energy Agency, the US Energy Information Administration and the Organisation of Petroleum Exporting Countries (Opec) all show worldwide oil demand growing by less than they did a month ago.
Taking the average of the three agencies’ forecasts, they now expect demand for oil to grow by about 1.2 million barrels a day this year, compared with last. That’s down from 1.3 million a month ago and more than 1.4 million in their forecasts made in January.
Projecting the most recent month’s Opec crude production forward for the rest of the year gives a global stock draw of 160 million barrels, according to Opec, but of only 24 million barrels, according to the IEA. Still, that’s better than a month ago, when the IEA still saw a small build in stockpiles this year.
But there is a catch. The weakening demand outlook for 2019 is driven to some big downward revisions for the first half of the year, with year on year growth still seen robust in the second half. If assessments for the third and fourth quarters also start being revised down, then the Opec+ group might need to cut output even further to keep supply and demand balanced.
The IEA now says global oil demand expanded by just 250,000 barrels a day in the first quarter compared with the same period last year. That’s the slowest rate of growth since the final three months of 2011, when the initial effect of the post-financial-crash recovery was wearing off. The other two agencies don’t see the first quarter in such bleak terms, although both are moving in the same direction, cutting their assessments of demand growth for the period from last month’s levels.
Temporary factors, such as mild temperatures across the Northern Hemisphere and widespread flooding across the US Midwest hit American oil consumption in the first four months of
the year. But demand is expected to recover “on the back of growth in the petrochemical industry and with higher gasoline consumption,†according to the IEA.