Global oil demand is growing at the fastest pace for five years, as low prices draw buyers in, says the International Energy Agency.
The IEA has increased its estimate for oil demand to 1.6m barrels a day (b/d), up 200,000 b/d on its previous estimate. It says “persistent macro-economic strength” supports higher than usual demand next year too, at 1.4m b/d.
“As economic growth solidifies and consumers respond to lower oil prices,” demand will increase, says the IEA in its monthly report for August.
However, the agency warns of slower non-OPEC supply of oil as low costs and spending cuts hit the sector. It has predicted this year will see less than half the supply of 2014, when non-OPEC suppliers saw a record of 2.4m b/d. It has predicted 1.1m b/d this year and 900,000 b/d in 2016.
”PEC crude supply inched 15,000 b/d lower in July to 31.79m b/d as Saudi output eased and offset record high Iraqi production and increased Iranian flows,” says the report.
Speaking last month, ETF Securities commodities specialist Nitesh Shah said that while oil demand had picked up thanks to low prices, it was not a long-term trend.
“The gain in demand is probably largely to do with the fact prices were weak and if demand is that price-sensitive and prices are due to rise, that demand will eventually weaken,” said Shah.