Bucking recent trend, IEA leaves oil demand projections unchanged

Headline world oil demand was revised up by a marginal 10,000 b/d, the smallest possible increment, to leave it at 86.33 million b/d. This compares with much bigger upward revisions to the same number of 130,000 b/d in December, 140,000 b/d in November, 350,000 b/d in October and 450,000 b/d in September.

Taking a breather after so many recent revisions, the IEA noted that the outlook was hard to read, with its own 1.4 million b/d estimate for demand growth this year pretty much in the middle of predictions ranging from as little as 800,000 b/d to as much as 2 million b/d. Oil markets, it lamented, are "becoming more difficult to interpret and predict as each year goes by."

Be that as it may, some trends are clear, including the switch in oil consumption patterns toward the developing world. OECD consumption is expected to stand still this year at 45.48 million b/d, while non-OECD demand jumps 3.7% to reach 40.85 million b/d. At that rate, it won't be too long before non-OECD overtakes the OECD.

There was a bit more movement among the IEA's supply side estimates, where it cut the projection for non-OPEC output this year by 150,000 b/d after a pessimistic reassessment of the giant BP-operated Azeri-Chirag-Guneshli project offshore Azerbaijan.

Elsewhere, there are lots of places expected to see higher output this year (the former Soviet Union, Brazil, global biofuels), but these are partly offset by an expected dip in US production and by ongoing declines in Norway and the UK.

And what's the upshot of these changes? It leaves the call on OPEC for this year at 29.05 million b/d, within a whisker of most estimates of the cartel's current supply, including the IEA's. So everything adds up nicely in the end.