Oil Demand Growth Stymied by Warm Weather and Lousy Global Economics: IEA

by Ship & Bunker News Team
Wednesday January 20, 2016

Warm weather is the reason global oil demand growth flipped from a near five-year high in the third quarter of 2015 to a one year low in the fourth quarter, the January International Energy Agency (IEA) Oil Market Report states.

Global demand in 2015 stood at 2.1 million barrels per day (bpd) for the first three quarters compared to 1.0 million bpd in Q4 2015, due to "exceptionally mild temperatures in the early part of the winter in Japan, Europe, and the United States – alongside weak economic sentiment in China, Brazil, Russia, and other commodity-dependent economies," the report says.

Meanwhile, the Agency says OPEC crude output in December slowed by 90,000 barrels per day, a figure that included output from new member Indonesia.

The IEA predicts 2016 global demand growth will moderate to 1.2 million bpd, and with regards to Iran boosting output it believes that "around 300,000 bpd of additional crude could be flowing to world markets by the end of the current quarter."

As for global inventories, which could build by a further 285 million barrels this year, the Agency says despite significant impending capacity expansions "this stock build will put storage infrastructure under pressure and could see floating storage become profitable."

Tanker rates, particularly those of VLCCs, were given a boost from floating storage demand in January of last year, but that demand waned in the coming months.

In December, the IEA predicted that global inventories will build until at least late 2016, but at a much slower pace than what occurred in 2015.

Ship & Bunker News Team
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