IEA sees 2015 oil demand growth much lower, supply hitting prices
By Dmitry Zhdannikov and David Sheppard
LONDON (Reuters) - Demand for oil in 2015 will grow far slower than previously forecast as global economies remain weak, the International Energy Agency said on Tuesday, and prices may extend their sharp fall so long as OPEC shows no sign of countering a supply surge.
The IEA said it cut its 2015 estimate for oil demand growth by 300,000 barrels per day (bpd) from its previous forecast and now expects demand growth of 1.1 million bpd to 93.5 million. It cut its 2014 estimate by 200,000 bpd to 0.7 million bpd.
It said demand would be supported by prices near four year lows - oil LCOc1 is around $88 a barrel from above $115 in June, a 25 percent drop resulting from a boom in U.S. shale oil production, slow global growth and a strong dollar.
But it added that those low prices would remain under pressure because of supply levels: Global oil supply rose by almost 910,000 bpd in September to 93.8 million bpd, almost 2.8 million bpd higher than the previous year.
In a rare IEA comment on OPEC's strategy, its chief analyst Antoine Halff said the producer group may no longer be willing or able to adjust production as the market has been transformed by the U.S. shale oil revolution.
Some OPEC members whose budgets depend on oil might prefer to keep selling at lower prices than lose their part of the market.
"We should not expect OPEC to necessarily play its traditional role of swing producer," Halff told Reuters on Tuesday, adding that other players with higher production costs might cut instead, such as those extracting from deepwater or oil sands.