Oil demand will rise faster than expected in 2014
Global oil demand will rise faster than expected this year, the IEA forecast on Tuesday, reporting that consumption accelerated at the end of 2013 as advanced economies led by the United States recovered.
But growth of Chinese demand slowed down in the second half of 2013, the International Energy Agency said.
Highlighting huge changes in the undercurrents of the oil market despite stable prices, the IEA said that emerging economies were now driving growth of oil demand.
But its monthly report focused on a rapid rise in US output.
This was accelerating debate about whether or not the United States should lift a ban dating from the oil shocks of the 1970s on the export of oil, the IEA said.
In the 34 countries belonging to the OECD group of advanced democracies, and for the first time since 2010, "demand appears to have swung back into growth in 2013," the International Energy Agency said in its monthly report on the oil market.
This was "driven by economic recovery in the developed world."
It raised its estimate of global demand for oil in the last quarter of 2013 by 135,000 barrels per day to 91.2 million barrels per day "led by a significant upward revision of 700,000 bd to the US demand assessment pegged to industrial fuels".
That was an increase of 40,000 bd from the IEA's estimate in December and was equivalent to a gain of 1.2 mbd or 1.4 percent in 2013.
"Momentum is forecast to accelerate modestly to 1.3 mbd in 2014," the agency said.
That represented an increase from the December forecast of 90,000 bd and took total demand to 92.5 mbd, "supported by the strengthening macroeconomic picture."
Average oil prices were "surprisingly steady" in 2013 with the future price of North Sea Brent oil slipping $3.0 per barrel to $108.70 and the US benchmark WTI price edging up $3.90 to $98.05 per barrel.
But this concealed "a profound redrawing of the oil map", and most significantly "the relentless rise in US crude production" which had grown by 990,000 bd.
That represented "one of the largest annual gains on record for any country" and had helped to offset production declines elsewhere and notably in Libya and Iran.
'Heated debate' on lifting US export ban
The US market had shown "remarkable flexibility" in absorbing this new supply, but could hit a buffer which the IEA described as the "crude wall".
US output last year had exceeded "even the boldest of expectations by a wide margin".
A ban on exports of crude oil had been minimised so far in large part by a boost to the export of refined products, and US refining output had surged by 500,000 bd in the second half of 2013 to the highest level for eight years.
"Once the world's largest net product importer, the US has become its top net exporter," the report said.
Meanwhile, global demand for oil had grown twice as fast as global supplies last year.
The IEA commented: "There is a rising tide of technical and political debate about whether -- or when -- the US market may run out of options to accommodate further gains without regulatory adjustments," the IEA said.
"The question of whether or not crude export regulation inherited from the 1970s ought to be revisited has become a matter of increasingly heated debate."
Regarding demand by emerging economies outside the Organisation for Economic Cooperation and Development, the IEA cut its estimates for the last quarter of last year.
"Chinese demand figures for the quarter have been cut by 290,000 bd from last month's report," it said. "Chinese momentum has been slowing since July ... Chinese demand growth is now assessed at 3.0 percent for 2013, down from last month's projection of 3.8 percent, rising to 3.6 percent in 2014, to 10.5 mbd.
"Other notable non-OECD downside adjustments include Kuwait and India."
In December, global supplies eased by 25,000 bd from the November level to 92.23 mbd, but supplies from members of the Organization of Petroleum Exporting Countries rallied by 310,000 bd to 29.82 mbd "reversing four months of decline."
However, total commercial oil stocks in OECD countries "plummeted by 53.6 mb in November, to show the steepest fall since December 2011."
The IEA was created by the OECD in the 1970s in response to the first oil price shock to monitor the oil and energy markets and to manage strategic stocks, on behalf of the parent body and its members.