PARIS (MNI) – The International Energy Agency said Friday it has
revised down its projections for global oil demand for the second half
of this year and next year, while leaving projections for non-OPEC
supply largely unchanged.

Demand in 3Q was cut by 300k barrels per day (b/d) and expected
demand in 4Q by 200 kb/d, giving downward revision of 100 kb/d for the
full-year average to 89.7 mb/d, up 700 kb/d from 2011.

Average demand growth next year was confirmed at 800 kb/d, but the
base effect of the revision for this year resulted in a reduction of 100
kb/d in average full-year demand to 90.5 mb/d. The revisions reflect
weaker economic forecasts, the agency indicated, noting that it had
anticipated the IMF’s latest downward revisions for global growth.

Projections for non-OPEC supply were little changed, foreseeing
average growth this year of 400 kb/d to 53.2 mb/d and growth next year
of 700 kb/d to 53.9 mb/d. As a result, the IEA trimmed its “call” on
OPEC crude and/or stocks by 100 kb/d this year and next to an average of
30.2 mb/d and 30.0 mb/d, respectively.

OPEC crude oil supply in September remained well above these “call”
estimates at 31.17 mb/d, despite a monthly decline of 510 kb/d to an
eight-month low, the agency estimated. Higher supplies from Iraq and
Libya were offset by reduced output from Nigeria, Saudi Arabia and Iran.

“Whereas many expected the sanctions to lose some bite in
September, as Iranian exporters and some of their clients were
reportedly seeking ways to get around insurance constraints, in fact
compliance appears to have tightened, and Iranian crude deliveries fell
to an estimated 860 kb/d, a new low,” it noted.

OECD industry stocks declined by a counter-seasonal 11.2 million
barrels in August, led by a strong seasonal draw in the US after
Hurricane Isaac disrupted production and imports. Forward demand cover
stood at 58.8 days, 0.1 days lower than July.

Preliminary data suggest stocks rebounded by 13.0 mb in September,
refuting the argument that the loss of Iranian supply might be linked to
the draw in August, the IEA argued. Stocks surged by nearly 10 mb in the
US compared to an average 1.5 mb build, barely edged lower in Europe
compared to an average 19 mb draw and built by 5 mb in Japan compared to
a 3.4 mb draw.

“The paradox is that US product stocks have been falling faster
than normal and European refiners have been running flat out despite
tepid product demand in both markets,” the IEA observed.

“Hurricane disruptions and a string of refinery glitches
(especially on the West Coast) are only part of the US story,” it noted.
“In both regions, the bottom line is that exports have become a key
driver of refining activity and profits, not just the outlet for surplus
product that they used to be.”

– Paris newsroom +331 4271 5540; email: ssandelius@mni-news.com

[TOPICS: MI$$$$,MI$OI$,M$$CR$,MAUDS$]