IEA cuts global oil demand forecast for 4th time in five months

Global oil demand next year will be weaker than previously estimated and supply from non-OPEC producers will be bigger, the International Energy Agency said.

Consumption will expand by 230,000 barrels a day less than estimated in November, the Paris-based adviser to 29 nations said in a report.

Output from nations outside of the Organisation of Petroleum Exporting Countries will grow at a faster pace than the agency predicted last month. Production rising faster than demand could strain some nations’ ability to store by the middle of next year, it predicted.

The agency cut projections because the economies of producer nations are being hurt by tumbling prices, the IEA said. Most of the reduction in next year’s estimate is attributable to Russia, where sanctions are hobbling growth, it said.

Brent crude costs that collapsed 43 percent this year are too low for 10 of OPEC’s 12 members to balance their budgets, data compiled by Bloomberg show.

“Some of the places where demand had been growing particularly fast in recent years had been producer countries because record-high prices were a huge stimulus,” Antoine Halff, head of the IEA’s oil industry and markets division, said. “Now those countries are affected very adversely.”

The agency cut estimates for the amount of crude needed next year from OPEC by 300,000 barrels a day. The group will need to pump an average of 28.9 million barrels a day in 2015, about 1.4 million less than its 12 members produced in November.

World oil consumption will increase by 900,000 barrels a day, or 1 percent, next year to average 93.3 million barrels a day, according to the report. The IEA curbed estimates for Russian oil demand in 2015 by 195,000 barrels a day to 3.4 million a day. It kept estimates for global demand growth in 2014 unchanged at 700,000 barrels a day.

The agency boosted projections for supplies outside OPEC in 2015 by 200,000 barrels a day, forecasting output will expand by 1.3 million barrels a day to 57.8 million a day. Non-OPEC supply will climb by a record 1.9 million barrels a day this year, it estimated.

“Despite lower crude oil prices, we expect U.S. production to continue to grow apace in 2015,” expanding by 685,000 barrels a day, the agency said.