A day after its World Energy Outlook looked ahead to the global oil market balance in 2030, The International Energy Agency's focus switched to more immediate concerns on Thursday with the publication of its latest monthly report.
The data showed big cuts in expected oil demand as a result of the global economic slowdown, particularly in the OECD but also in some developing countries.
The IEA now thinks oil demand will grow by just 120,000 b/d in 2008, the lowest level for years, and by a slightly improved 350,000 b/d in 2008.
The agency represents oil consumers and traditionally urges caution if any of its data might support a move by producers to even think about reducing oil supply.
But with OPEC confirming plans for emergency talks in Cairo next week--albeit only a 'consultative' meeting, not a formal one--there were some very clear signs in the IEA report of what is on their minds.
The big reductions in demand were matched by cuts in the 'call' on OPEC, which represents the amount of oil the IEA estimates that OPEC needs to pump in order to balance supply and demand.
The call on OPEC for the fourth quarter of this year was slashed by 600,000 b/d to leave it at 31.1 million b/d, around 1 million b/d less than the group was estimated to have produced in October.
And it doesn't get any better in 2009, when the average call on OPEC is forecast to fall even further to 30.4 million b/d.
The IEA's assessment of the stocks situation could give further cause for concern to producers, with the report describing end-September stocks as high and saying that preliminary data suggested a further sharp increase in October.
One more sobering thought for oil producers already reeling from the breakneck speed with which oil prices have fallen since the summer -- OPEC's own crude basket price dipping under the $50/barrel barrier on Wednesday for the first time since November 2005.
Leave a comment