Create Profile

Creating your profile will enable you to submit photos and stories to get published on News24.

Please provide a username for your profile page:

This username must be unique, cannot be edited and will be used in the URL to your profile page across the entire 24.com network.

Facebook Sign-In

Hi News addict,

Join the News24 Community to be involved in breaking the news.

Log in with Facebook to comment and personalise news, weather and listings.


Oil stocks to rise as economic slowdown hits demand

10 August 2012, 14:39

London - Oil demand will rise more slowly than expected next year as economic growth falters, pushing up stockpiles of fuel worldwide and offering some relief to consumers facing high prices.

The West's energy watchdog, the International Energy Agency (IEA), said on Friday it had cut its estimates of oil use worldwide for several years, trimming its 2013 demand forecast by 400,000 barrels per day (bpd) .

The cut comes in the light of a "worrying slowdown" in global economic activity.

"Lower economic growth is feeding through to slower oil demand all round," said David Fyfe, head of the IEA's markets division. "Global inventories have risen, and the oil market looks comfortably supplied."

The IEA's monthly market report on Friday echoed pessimistic forecasts this week by the U.S. government and the Organization of the Petroleum Exporting Countries (OPEC).

The three top energy market forecasters all say output of crude oil has exceeded demand by a wide margin in the first half of this year.

They are filling up stocks of oil and offering a sizeable cushion to cope with any unexpected shock to supplies.

This should help balance the impact on oil prices of political tensions such as the stand-off between the West and Iran over Tehran's nuclear programme.

"The significant stock builds that occurred in the first half of 2012 will help relieve global oil markets in the second half," the U.S. government's Energy Information (EIA) Administration said.

The EIA expects oil inventories in the developed industrialised economies to rise to 2.62 billion barrels, or 57 days of forward cover by the end of this year.

This is among the highest end-of-year levels in the last decade because of the decline in OECD consumption".

OPEC, which supplies more than a third of the world's oil, says it has been pumping more than two million bpd more oil than needed for the last few months, filling up tanks worldwide.

The producers' group said in its report that economic slowdown could depress oil demand growth further.

"The gloomy picture could reduce the world oil demand growth forecast by 20 per cent next year," OPEC said.

But security of supply is still a nagging worry in oil markets.

"The geopolitical dimension is likely to continue to provide something of a floor for prices.

``The issue of Iran will likely continue to weigh heavy on the market through the second half of 2012," the IEA said in its monthly report.

"Moreover, there is a risk that recent progress in restoring output from Libya, Iraq and Nigeria could be jeopardised if recent political and civil tensions worsen."

North Sea Brent crude oil has since recovered to above 110 dollars, supported by Iranian tensions and investors' hopes for new money printing programmes from global central banks.

But supply and demand fundamentals of the market are weak.

The IEA said it had revised its forecast for oil demand growth in 2013 down by 150,000 bpd to 830,000 bpd, below the growth of 870,000 bpd expected in 2012.

"The latest (Chinese) data reveals a sharp deceleration in momentum compared to the double-digit expansions seen at the beginning of 2011," the IEA said.

On the supply side, global oil production in July stood 2.6 million bpd higher than a year ago, with 80 percent of the increase deriving from OPEC, it said.

The agency said exports of Iranian oil in July fell to multi-year lows of 1 million bpd from 1.74 million in June, but it added that sales of Iranian oil to major consumers could start picking up this month.

"There is scope for imports from Iran to recover modestly from September onwards, albeit we retain our existing assumption that around one million bpd of Iranian oil may struggle to find buyers in the second half of 2012."

"An observed decline of 14 million barrels in Iranian floating storage in July also suggests that some extra oil is en route to customers for Aug./Sept. delivery," the IEA added. 


Tags opec

Read News24’s Comments Policy

Comment on this story
Comments have been closed for this article.

Read more from our Users

Nigeria @ 56: Words to my green f...

A leader’s job is not to dictate, but rather to be respected, admired and be a trustee, of the land we love, with so much potential, a land which should be freer than free. Its still a long way to fufilling our destiny! Read more...

Submitted by
Isaac Asabor263
Recession: An opportunity for Nig...

The recession should be seen as an opportunity for the country’s promotion as long as we all collectively conduct ourselves in a patriotic manner, writes Isaac Asabor.  Read more...

Submitted by
Black and White

We want to imitate the whites in everything because we are ignorant of our inherent originality and content. We spend all our Naira to acquire his inventions because we so oblivious of our natural endowments that we allow him have it for free. Read more...

Submitted by
Nate Nat
Adamawa State University Mubi: A ...

ADSU integrity forum has accused the Sunday Joshua Wugira, a lawyer, of adopting unorthodox tactics by abusing his privilege by attacking the integrity of ADSU Vice Chancellor Dr. Moses Zira Zaruwa, writes a News24 reader. Read more...

Submitted by
Abdulsalam Jubril
My Country Nigeria (Part One)

Poetry by Abdulsalam Jubril.

Submitted by
Abdulsalam Jubril
Recession, dearth in leadership a...

Every leader has the opportunity to become great and making himself immortal in the lives and hearts of people for generations to come. Will Mr. President seize this opportunity?, questions Abdulsalam Jubril. Read more...