The International Energy Agency (IEA) has moved its oil-demand forecast up another notch, reflecting a gradually strengthening outlook for the world economy. But the Paris-based energy adviser to 28 industrialised nations warned that oil markets remained weak, with prices "frequently knocked off their perch by negative economic developments". Predicting that crude would average US$75 per barrel next year, up just five per cent from yesterday's price of about $71, the IAE said near-term oil demand was "in the doldrums".
"There is considerable uncertainty as to the world's short-term economic outlook," it added. Nonetheless, the agency raised its global oil demand forecast for the coming year by 150,000 barrels per day (bpd), its third upwards revision in as many months. It now expects demand to increase by 1.42 million bpd next year to 86.05 million bpd, based on rosier economic projections from the International Monetary Fund and "stronger preliminary data" on economic recovery in Asia and the Americas.
"On the assumption that we are not in a double-dip situation economically speaking, we would still expect a pick-up in demand next year," said David Fyfe, the head of the IEA's oil industry and markets division. But the agency's latest monthly report also drew attention to sliding Opec compliance with the record 4.2 million bpd of output cuts the group pledged last year. Last month, Opec members delivered just 62 per cent of the promised cuts, the IEA estimated, down from 66 per cent in August and a spring peak of about 80 per cent.
According to IEA data, Saudi Arabia, the UAE and Kuwait had the highest compliance rates last month, delivering 99, 98 and 96 per cent, respectively, of their target reductions. Angola, which this year holds the rotating Opec presidency, has not cut output, while Iran has made only five per cent of its allotted reduction. Pointing to Opec's uncharacteristic failure to call formally for better compliance after its meeting last month, the IEA implied that the past five months' "steady climb" in Opec output could continue.
In a commentary recently posted on its website, Opec said it was concerned that its efforts to stabilise the market had been undermined by oil exporters from outside the group. Opec said that at its next meeting, in December, it would be looking for "meaningful, practical support" from other producers that had recently cut into its market share by ramping up output. @Email:tcarlisle@thenational.ae