International Energy Agency says oil demand could reach 2008 levels in 2012 or maybe after 2014; Crude rises to 8-month high of $73

The IEA said in 2004 that oil intensity, defined as primary oil consumed per unit of GDP, in selected developing countries relative to that of the OECD, cited India, which used more than two and half times as much oil as developed countries per unit of GDP, while the economies of China, Thailand and African countries were also very oil intensive.

 It estimated that oil imports cost India $15 billion or 3% of its GDP in 2003. The oil-import bill increased by 16% between 2001 and 2003. And oil intensity is still increasing in many developing countries as modern commercial fuels replace traditional fuels in the household sector and industrialisation and motorisation continue apace. Rising oil intensity is reflected in the share of oil imports in total imports, which is increasing in many developing countries – - notably in China and India. By contrast, in OECD countries, the share of oil in total commodity imports by value fell from 13% in the late 1970s to only 4% in the late 1990s, but has since rebounded with higher oil prices.

 
The 30 member countries of the OECD (Organisation for Economic Cooperation and Development) are: Australia, Austria, Belgium, Canada, Czech Republic, Denmark, Finland, France, Germany, Greece, Hungary, Iceland, Ireland, Italy, Japan, Korea, Luxembourg, Mexico, the Netherlands, New Zealand, Norway, Poland, Portugal, Slovak Republic, Spain, Sweden, Switzerland, Turkey, United Kingdom, United States.

US real GDP in the period 1970 – 2003 increased by a factor of 2.74. In the same period, US oil consumption rose from 5.36 billion barrels to 7.31 billion barrels, according to the EIA. That’s an increase by a factor of 1.36. So oil intensity has fallen with a multiplier of 1.36/2.74 = 0.50.

The International Energy Agency, the energy watchdog of 28 developed countries including Ireland, on Monday, cut five-year forecasts for global crude demand because of the economic slump, forecasting consumption won’t regain 2008’s levels until 2012 or maybe after 2014 depending on the economic situation. The price of crude jumped above $73 in New York — just below 50% of the the all-time intra-day record of $147.27 in July 2008. Price of crude rises to 8-month high of $73 a barrel following an attack on a Shell Oil facility in Nigeria.

The IEA cut its oil demand estimates for every year through 2013 by about 3 million barrels a day, in its latest Medium- Term Oil Market Report. Consumption will average 86.76 million barrels a day in 2012, the first year it will rise above 2008’s level of 85.76 million barrels a day, according to the Paris-based agency.

In electronic trading on the New York Mercantile Exchange Tuesday, the price of the US benchmark is $72.84 up $1.35 from Monday’s close.

“There is so much uncertainty about the economic recovery and how fast it may happen,” IEA director Nobuo Tanaka said on Monday.“We may have a supply crunch again, just like last year, in 2014 to 2015. If the economic recovery is slower, we could have ample supply capacity.”

Oil demand in 2014 will rise to 88.99 million barrels a day, according to the IEA. From 2009, when oil demand will fall the most since the early 1980s, that represents an average annual increase of about 1.4%, or 1.2 million barrels a day. From 2008 levels it represents an average increase of 0.6%, or 540,000 barrels a day.

The IEA’s oil demand estimates reflect a “higher GDP scenario” based on the International Monetary Fund’s forecasts for global economic growth made last April. The IMF predicted world economic output growth to reach nearly 5% a year between 2012 and 2014, the IEA said.