24-07-08 Global oil product demand is expected to grow by 1.1 % or 860,000 bpd to 87.7 mm bpd in 2009, on a par with 890,000 bpd growth in 2008, according to an oil report.
The July oil market report, released by the International Energy Agency (IEA) said that high oil prices contribute to a "contraction" in the Organization for Economic Cooperation and Development (OECD) oil product demand, "offset by robust growth in developing economies". It added that "strong" non-OECD consumption also offsets downward revisions elsewhere, lifting 2008 demand by 80,000 bpd.

Furthermore, the report noted that crude oil futures fell back from their early-July $ 145/bbl peak, but remain high, due to a meagre second quarter (2Q08) stock build, "tight distillate markets and ongoing geopolitical risks".
"Refiners are paying record premiums for distillate-rich crudes in an effort to bolster yields; however, weak gasoline and fuel oil cracks are keeping refining margins low," it indicated.

As for Non-OPEC supply, it is seen rising from 640,000 bpd to 50.6 mm bpd in 2009, following a late-year increase in 2008, with Asia, the Caspian, Brazil, Canada and the US adding to supplies.
The report affirmed that NGLs from Saudi Arabia, Qatar, the UAE, Nigeria and Iran strengthen the 810,000 bpd expansion in OPEC gas liquids in 2009. The monthly report showed that OPEC crude supply increased by 350,000 bpd in June to 32.4 mm bpd, as Saudi Arabian supply rose to 9.45 mm bpd and exports from floating storage lifted Iranian supply to 3.8 mm bpd.

Although higher supply lowers effective OPEC spare capacity to 1.7 mm bpd, increases from Saudi Arabia, Angola, Iraq and Nigeria lift overall capacity by around 1.0 mm bpd by end-2008, it affirmed.
"3Q08 global refinery throughput is revised down by 0.4 mm bpd to 75.3 mm bpd on weak OECD demand and poor margins. The addition of 2 mm bpd of crude distillation capacity and significant investment in upgrading units elsewhere should keep gasoline markets well supplied and slightly ease middle distillate tightness during early 2009," according to the report.