World energy agency cuts oil demand forecast

World oil demand is set to lose some momentum in line with unsteady economic growth, the IEA said on Friday while spotlighting threats to OPEC from shale energy and unrest. The International Energy Agency trimmed slightly its outlook for growth of global oil demand this year and next in line with a downgrading of economic growth forecasts by the International Monetary Fund. The agency's monthly report on the world energy market also spotlighted a dilemma for the Organisation of Petroleum Exporting Countries. In the short term OPEC's production is being sapped by political unrest and violence in several member countries, and in the longer term by the vast structural effects on the energy market of the boom in production of shale oil and gas in North America. "Many commentators, recognising in the new North American supply a defining feature of tomorrow's market, are questioning its implications for the future of OPEC," the IEA wrote in its August report. The comment was made just two months before the 40th anniversary of the Yom Kippur war when several Arab countries, as part of their attack on Israel, engineered the first of two oil-price shocks by OPEC in the 1970s. The price shocks were defining events in how economies evolved in the decades since. One consequences was the creation of the IEA as the energy and oil strategic reserve monitoring arm of the Organisation for Economic Cooperation and Development which groups leading democracies. The agency said that it was trimming its forecast for growth of global oil demand this year by 30,000 barrels per day to 895,000 barrels per day because the International Monetary Fund in its revisions in July had lowered its forecast for growth of the global economy from 3.3 percent to 3.1 percent. The speed at which oil demand would pick-up next year had also been reduced to 1.1 million barrels per day from 1.2 mbd because economic growth now looked like being 3.8 percent instead of 4.0 percent. Demand in the United States had risen firmly in the first six months in line with economic recovery there, but in the long term was expected to edge down, whereas production of shale oil and gas was rising fast. In four of the first six months of the year, US demand had risen on a 12-month basis "marking the strongest sequence in US consumption data since the first quarter of 2011." The IEA forecast in November that the United States could become the biggest oil producer, ahead of Saudi Arabia by 2017, and spoke in May of a shale energy "shock" to the structure of global markets. On Friday it said that in July supplies of oil from outside OPEC rose by 570,000 bd to 54.9 mbd "with North America providing around 40 percent of the growth" although "Canada, rather than the US, was responsible for most of this increase."