IEA counters OPEC with weaker growth forecast

International Energy Agency (IEA) counters OPEC's optimistic forecast for demand growth with its own expectations of much weaker number. OPEC now expects global oil demand to grow from 91.4 million barrels/day in 2014 to 94.1 million barrels/day by end 2016. This year it expects demand data to show 92.9 million barrels/day intake.

• Lower oil price has given to strong rise in demand, which IEA estimates to be 1.8 million barrels/day. However due to global economic slowdown it expects demand to grow only by 1.2 million barrels/day next year compared to previous forecast of Global oil demand growth will slow more than expected next year as the stimulus from lower prices fades and economic growth weakens in countries dependent on commodity revenues.

IEA said outlook is more pessimistic as IMF has cut its growth forecast 2015 to 3.1% from 3.5%. According to IEA, though demand from China and Europe was higher this year, exuberance of lower price is fading.

As global growth disappoints in oil importing economies like China, Europe, and India, additional slowdown in oil exporting economies such as Brazil, Russia, and Saudi Arabia making things worse.

However, its supply forecast is in line with OPEC. As of September, world oil supply stands at 96.6 million barrels/day as of September and large supply from OPEC is driving high cost non-OPEC producers out of the market. According to IEA, supply is shrinking swiftly in US.

According to IEA estimate, Non-OPEC supply has slowed by 180,000 barrels/day in September to 58.3 million barrels/day and is likely to shrink to 57.8 million barrels/day in 2016.

In September OPEC crude supply stands at 31.7 million barrels/day and this year the cartel has produced 1 million barrels/day of extra crude compared to last year.