The International Energy Agency said on Wednesday that global oil demand is likely to be muted over the next year and supply and inventory levels look comfortable, implying there is no need to release emergency stocks to curb oil prices.
The United States and other members of the International Energy Agency (IEA) such as France and Britain have been considering an emergency stocks release to help suppress high oil prices.
But the IEA is opposing a coordinated release of stocks, saying the market does not face a supply crunch. Its monthly oil market report on Wednesday implied such a release would be unnecessary. The agency said global oil demand would grow at a steady rate of around 800,000 barrels per day (bpd) or 0.9% in both 2012 and 2013, little changed from its previous assessment.
“This modest growth rate reflects the combined effects of sluggish global economic activity, historically elevated oil prices and global improvements in energy efficiency,” it said.
“On a forward demand basis, inventory cover looks more comfortable, due mostly to diminishing demand prospects.” The IEA said the Organization of the Petroleum Exporting Countries (OPEC), which pumps around a third of the world’s oil, produced 45,000 bpd more oil in August at 31.55 million bpd, due to increases in Angola, Nigeria, Iraq, UAE and Ecuador.
The increase in OPEC supply failed to offset fully unplanned production outages in nonOPEC countries.
But compared to a year ago, global oil production stands 2.0 million bpd higher due to increases from OPEC, which is pumping way above the levels required by the market and therefore contributing to a large stocks build across the world.