Demand for oil is increasing at its fastest pace in five years,
boosted by an oil-price drop below $50 a barrel, a top energy
watchdog said Wednesday, as it sharply upgraded its
consumption-growth forecast for the commodity.
But in a blow to the Organization of the Petroleum Exporting
Countries' strategy to defend its market share, the International
Energy Agency said lower oil prices would only start to dent rival
production next year.
In its closely watched monthly report, the IEA said global oil
demand would grow by 1.6 million barrels a day this year, an upward
revision of 200,000 barrels a day from its previous forecast, and
would keep rising by 1.4 million barrels a day next year. The
organization—which advises industrialized nations on energy—said
consumers were responding to lower oil prices while macroeconomic
prospects were better than expected.
"Oil's plunge below $50 barrels a day from triple digits a year
ago has seen demand react more swiftly than supply," the IEA said.
"Against this backdrop, many participants in the oil industry have
adopted a new mantra â " 'lower for longer'."
The news comes after OPEC also upgraded its oil consumption
views for 2015 in a report Tuesday. Global oil demand is expected
to grow by 1.38 million barrels a day this year, some 90,000
barrels a day more than it previously expected, the oil producers'
cartel said.
OPEC has vowed to keep its production elevated despite lower oil
prices to stop rival producers—notably U.S. light tight oil—from
growing.
Supply outside OPEC is expected to decelerate but it has yet to
fall. Non-OPEC production growth is expected to slow from a 2014
record of 2.4 million barrels a day to 1.1 million barrels a day
this year, the IEA said. But it will only start declining—by
200,000 barrels a day—in 2016. Most of the drop will come from
Russia as U.S. production will continue rising—by about 190,000
barrels a day—next year, the agency also said.
"While a rebalancing has clearly begun, the process is likely to
be prolonged as a supply overhang is expected to persist through
2016—suggesting global inventories will pile up further," the
agency added.
Write to Benoî t Faucon at benoit.faucon@wsj.com
Subscribe to WSJ: http://online.wsj.com?mod=djnwires