16-01-08 The International Energy Agency cut its estimate of world oil demand growth for 2008 to 1.98 mm bpd, down 130,000 bpd from its previous forecast.
The fall in year-on-year growth stemmed from an increase in the IEA's estimate of demand in 2007 contained in its latest monthly oil market report. The IEA now estimates demand last year at 85.84 mm bpd, up 150,000 bpd from its previous monthly report, due mainly to upwards revisions in the Middle East and Asia and stronger than expected data for the fourth quarter from North America and Europe.

The IEA's estimate of average demand in 2008 was raised by a marginal 20,000 bpd to 87.82 mm bpd. The agency said it was waiting for new assessments of the health of the US economy from the International Monetary Fund and the OECD before making any revisions to its oil demand forecasts in the country.
On the supply side, the IEA estimated total world oil production at 86.95 mm bpd in December, up 870,000 bpd from the previous month on the back of increases from OPEC, North America, the former Soviet Union, Brazil and China.

OPEC crude output climbed to 31.95 mm bpd in December, up 825,000 bpd from November, although 500,000 bpd of this increase was due to the addition of 500,000 bpd of supply from new member Ecuador, previously included in the non-OPEC category.
OPEC supply was also boosted by a jump in output from the UAE to 2.48 mm bpd from 2.15 mm bpd as Abu Dhabi offshore crude output restarted after maintenance work. Saudi Arabian output was unchanged on the month at 9.06 mm bpd.

OPEC's 10 members bound by output agreements pumped an average of 27.46 mm bpd in December, 440,000 bpd more than in November and 207,000 bpd higher than the 27.253 mm bpd target that came into effect at the beginning of November. For 2007 as a whole, world oil production rose to 85.54 mm bpd, up 130,000 bpd from 85.41 mm bpd in 2006, the IEA said.
Going forward, the IEA said it expected non-OPEC oil supply to rise by 1.02 mm bpd in 2008, 60,000 bpd less than previously forecast. Production is expected to rise from countries including Russia, Azerbaijan, Kazakhstan and Brazil, although continued production losses are seen coming from Mexico, the North Sea and US production outside the Gulf of Mexico, the IEA said.

The expected increase would take non-OPEC production to an average of 50.7 mm bpd this year, up from an average level last year of 49.7 mm bpd, not including supply from Ecuador before it rejoined OPEC in November. Total production from Russia, including condensate and NGLs, is expected to rise to 10.23 mm bpd this year, up from around 10.1 mm bpd in November and December last year but 15,000 bpd below the IEA's previous forecast.
The IEA raised its 'call' on OPEC crude in 2008 to 31.7 mm bpd, up 600,000 bpd from in December's report, but again this increase was exaggerated by the removal of Ecuador from the non-OPEC ranks.