Company-held oil inventories in the major industrialized countries are expected to be near normal levels heading into the fourth quarter as demand slides, the U.S. Energy Information Administration said Tuesday.
Oil demand in the countries comprising the Organization for Economic Cooperation and Development is expected to average 49.48 million barrels a day in the fourth quarter, down 0.6% from a year ago, EIA said in its latest monthly short-term energy outlook. That's equal to a 300,000-barrels-a-day decline in oil demand in the quarter, more than the 210,000-barrels-a-day decline estimated a month earlier. EIA revised the year-earlier global demand figures in the latest report.
OECD oil inventories fell by 120,000 barrels a day in the second quarter, compared with an average rise of 910,000 barrels a day, EIA said. Stocks at the end of the second quarter were 2.56 billion barrels, equal to 53 days of forward demand, which is near normal levels. EIA said stocks in the third quarter are expected to rise by 90,000 barrels a day, far less than the average 450,000-barrels-a-day rise.
But "due to falling OECD (oil) consumption" this would leave stocks at near normal levels in terms of days of supply at the end of the third quarter.
EIA said global oil demand in the fourth quarter is expected to average 88.04 million barrels a day, up 1.3% from a year ago. Figures for the year-earlier period were revised, but the rise is in line with the gain projected a month ago.
Demand outside of the major industrialized nations, or non-OECD demand, is expected to rise by 3.8% in the quarter, to 38.56 million barrels a day. The latest forecast, including year-earlier revisions, compares with an expected 3.6% rise in the August forecast.
Oil demand in China, the world's second-biggest oil consumer after the U.S., is expected to rise 6% in the fourth quarter, to 8.34 million barrels a day, unchanged from the August forecast.
Global oil demand for 2009 is expected to rise by 1.1% from 2008, to 87.4 million barrels a day, in line with the August forecast. Tuesday's report contained revisions for both years.
OECD demand in 2009 is expected to fall by 0.8% from 2008, to 48.04 million barrels a day. The August forecast called for a 0.6% decline, but the latest forecast revises the figures for both years.
Non-OECD output in 2009 is expectedto rise by 3.5%, to 39.36 million barrels a day, compared with 3.3% a month earlier, before the latest revisions.
Chinese demand is expected to rise 5% in 2009, to 8.42 million barrels a day, unchanged from the August forecast.
For the current year, global oil demand is expected to rise 0.8% to 86.48 million barrels a day, including revisions in 2007 data. In August, EIA projected a 0.9% rise, using lower figures for both years.
OECD demand in 2008 is expected to fall 1.4%, to 48.45 million barrels a day, compared with an expected 1.1% decline in the August report.
Non-OECD demand this year is expected to average 38.04 million barrels a day, up 3.7% from a year ago, compared with a 3.6% rise in the August report.
China's 2008 oil demand is expected to average 8.02 million barrels a day, up 5.8% from a year ago, unchanged from the August forecast.
EIA said that if China halts imports of selected products in September to draw down stocks built up ahead of the Olympics, the impact on demand would be temporary.
Non-OPEC oil supply is scheduled to rise by about 300,000 barrels a day in the second half of this year and by 900,000 barrels a day in 2009. In the first half of 2008, non-OPEC supply fell by 280,000 barrels a day.
The U.S., Brazil and Azerbaijan are expected to lead non-OPEC output growth through 2009. But possible delays in key projects, heightened risks to Caspian exports, hurricane impact and potentially weaker output from Russia, Mexico and the North Sea could impact the expected supply rise "leading to both higher demand for OPEC oil and higher prices than currently projected."
EIA projects U.S. crude oil prices will average $116 a barrel this year, rising to $126 next year on stronger global demand.