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London • Oil demand will expand at the slowest pace since 2009 this year as global economic growth weakens, the International Energy Agency said. The adviser to governments also cut its estimates for 2015.
Oil consumption will increase by about 650,000 barrels a day this year, the Paris-based agency said in its monthly market report Tuesday. The reduction of 250,000 barrels a day is the fourth in a row and means growth will be about half what it anticipated in June. Crude prices have plunged to a four-year low amid a glut.
"The sell-off is putting a spotlight on weaker-than- expected demand as a leading factor behind the drops," said the IEA, which advises 29 nations on energy policy. A "staggering" increase in supply has also weakened prices.
Brent futures have plunged 20 percent this year, sinking below $90 a barrel last week amid speculation that OPEC will refrain from supply curbs needed to tackle a glut caused by muted demand, booming U.S. shale output and the return of production from Libya.
Global fuel use will rise by 0.7 percent this year to 92.4 million barrels a day, the agency said. It cut 2015 demand estimates by about 300,000 barrels a day. Consumption will nonetheless accelerate next year, rising by 1.1 million barrels a day, or 1.2 percent, to an average 93.5 million a day.
The reduced outlook for global demand means that less crude will be needed from the Organization of Petroleum Exporting Countries than previously estimated, the agency said. This call on OPEC was cut by 200,000 barrels a day for both 2014 and 2015.
The group responsible for 40 percent of global oil supplies will need to provide an average of 28.8 million barrels a day in the first quarter of 2015. That's about 1.9 million day more than the 30.66 million its 12 members pumped in September, when output rose to a 13-month high amid a recovery in Libyan output, according to the IEA. OPEC will need to pump an average of 29.3 million a day in 2015.
Saudi Arabia, the group's biggest member, has "appeared determined to defend its market share" in Asia, even at the expense of lower prices, the agency said. The country extended discounts for its customers on Oct. 1.
The IEA's demand revisions follow a less optimistic outlook from the Washington-based International Monetary Fund, which on Oct. 7 reduced forecasts for global economic growth in 2015 to 3.8 percent, from a July projection of 4 percent.
Prices haven't yet fallen sufficiently to stimulate demand, or to provoke producers into curbing supply, the agency said.
While the strain on revenues from oil's drop may encourage some producers to "lower output targets," such countries "are not signaling an imminent cut," the IEA said. OPEC is next due to meet to review its target on Nov. 27. Most U.S. shale output, also known as "light, tight oil," would remain profitable even if Brent dropped to $80 a barrel, according to the agency.
A 2.8 million barrel-a-day surge in global supply in September may "turn out to be a high-water mark," the agency said, as output is set to slow in the former Soviet Union and China.
Increasing supplies swelled total oil inventories in developed nations in August, the agency said. Stockpiles rose by 37.7 million barrels to 2.7 billion, narrowing their deficit to the five-year average to the smallest since September 2013.