PARIS (MNI) – The International Energy Agency said Tuesday it has
revised down further its forecasts for global oil demand at the end of
this year and next year, while hiking projections for non-OPEC supply.

Waning demand growth and prospects for faster supply increases have
led traders “to cut their bullish bets on crude prices to lows unseen in
years,” the agency said in its monthly Oil Market Report.

“Judging from the record so far, 2012 may go down in oil history
not just as one of exceptionally frequent supply disruptions, but also
as one when no production shortfall seemed large enough to affect global
oil markets in a truly big way,” the IEA commented.

“Such apparent resilience, due in part to the sorry state of the
global economy, is somewhat misleading, however,” it added.

Reflecting weaker-than-expected economic expansion, the IEA cut its
projection for 4Q global demand by 300,000 barrels per day (b/d) to 90.1
mb/d, for a cumulative downward revision of 850 kb/d since June. Its
forecast for average demand next year was trimmed by 100 kb/d to 90.4
mb/d.

At the same time, projections for 4Q non-OPEC supply were revised
up by 200 kb/d to 53.8 mb/d and for next year by 100 kb/d to an average
of 54.1 mb/d.

As a result, the IEA trimmed its “call” on OPEC crude and/or stocks
in 4Q by 500 kb/d to 30.0 mb/d and for next year by 200 kb/d to an
average of 29.8 mb/d.

OPEC crude oil supply in October remained well above these “call”
projections, despite a decline of 30 kb/d to a nine-month low 31.15
mb/d. Supply disruptions in Nigeria offset a small upturn in Iranian
production after seven months of decline.

Non-OPEC production rebounded by 840 kb/d in October to 53.4 mb/d
after seasonal maintenance in the North Sea and Brazil, as well as
Hurricane Isaac in the US, reduced output to 52.6 mb/d in September.
Production in 4Q is expected to be 560 kb/d higher on year, roughly 190
kb/d above last month’s estimate. Non-OPEC supply is projected to rise
by 860 kb/d next year an average of 54.1 mb/d – 150 kb/d more than the
previous forecast.

Global oil supply thus rose 800 kb/d in October to 90.9 mb/d for a
2.0 mb/d gain on the year, with 80% of the increase coming from OPEC
crude and NGLs.

OECD total oil commercial inventories rose in September by a steep,
counter-seasonal 15.2 million barrels, extending six months of builds,
to 2,746 mb. Forward demand cover stood at 59.6 days, unchanged from
August. Preliminary data indicate OECD oil stocks rose by 5.5 mb in
October, the agency said.

“Relatively benign price outcomes should not be cause for
complacency,” the IEA cautioned. “Growing reliance on international
trade for product supply is spreading oil supply risk from the upstream
to the downstream. Increased product market integration means consumers
in all regions are increasingly exposed to local shortfalls in refining
or product distribution, even as they remain exposed to traditional
crude supply disruption risks.”

“This will be even more so when supply/demand product balances
start tightening again,” it warned.

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

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