PARIS (MNI) – Global oil supply capacity should keep slightly ahead
of expected moderate demand growth next year, potentially averting price
shocks in the absence of major geopolitical tensions and supply outages,
the International Energy Agency said Thursday.

The agency’s first forecasts for 2013 see average global demand
growing by 1.0 million barrels per day (mb/d) to 90.9 mb/d after a
projected increase of 0.8 mb/d this year.

Demand growth next year would come entirely from emerging markets
and remain “well below the pre-credit crunch trend,” the IEA said in its
monthly Oil Market Report, noting that demand from outside the OECD bloc
should surpass that of the OECD.

Non-OPEC supply growth should accelerate to 0.7 mb/d next year to
average 53.9 mb/d, coming largely from Canadian oil sands, US light
tight oil, and Brazil’s Campos and Santos basins, it said, revising down
its growth projection for this year by 0.2 mb/d to 0.4 mb/d.

The global demand forecasts are roughly in line with those of OPEC
released Wednesday for 0.8 mb/d growth next year after +0.9 mb/d this
year. But OPEC expects stronger growth in non-OPEC supply of 0.7 mb/d
this year and 0.9 mb/d next year.

The IEA’s forecasts would leave next year’s expected “call” on OPEC
crude and/or stocks at an average of 30.5 mb/d, unchanged from this
year’s projection. Next year’s “call” would range from 29.7 mb/d in 2Q
to 30.9 mb/d in 3Q.

While the forecasts “hint at something of a price ceiling, the
latent potential of emerging market demand growth and ongoing risk of
nasty supply surprises could keep prices stubbornly high in absolute
terms,” the agency cautioned.

OPEC’s crude capacity growth is expected to slow to 245 kb/d next
year after a 750 kb/d surge this year thanks to Libya’s comeback. Gains
in Iraq, the UAE and Angola are expected to offset an assumed depletion
of Iran’s capacity if sanctions remain in force. OPEC NGL output would
average 6.5 mb/d in 2013 after growth of 0.4 mb/d this year.

Next year’s expected OPEC/stock call would be below OPEC’s crude
supply last month of 31.8 mb/d, down 0.1 mb/d from May. Angola and Iran
posted the largest declines in June, offsetting near-record production
of 10.15 mb/d from Saudi Arabia. Preliminary estimates for imports of
Iranian oil in June stand at 1.9 mb/d, around 0.5 mb/d below levels in
4Q, the IEA said.

Global oil supply fell by 0.5 mb/d in June to 90.4 mb/d, with
non-OPEC liquids production accounting for 75% of the decline. Compared
to a year ago, global production was up 2.0 mb/d, all from higher OPEC
crude and NGLs.

Non-OPEC supply fell by 0.4 mb/d in June due to labor strikes,
tropical storm Debby and planned maintenance in Gulf of Mexico and was
0.1 mb/d lower on the year.

“Physical market fundamentals have clearly eased since the start of
the year,” with an implied global stock build in 2Q of 2.1 mb/d after
+1.3 mb/d in 1Q, the IEA estimated.

OECD industry oil stocks rose by 15.4 mb in May to 2.672 billion,
lagging a five-year average build of 25.1 mb. Forward demand cover fell
by 0.8 day to 58.9 days, still 1.4 days above the five-year average.
Preliminary data for June point to a 7.2 mb decline, in contrast with a
five-year average 2.3 mb build, the IEA said.

With an underlying OPEC crude/stock call now estimated at near 31
mb/d in the second half of this year, “OPEC producers may follow through
on their mid-June pledge to curb output from current elevated levels if
customers request less oil,” the IEA said.

“While strict adherence to the previous 30 mb/d quota risks a
renewed and potentially damaging price surge, lower production may in
any case derive from the tightening restrictions on Iran’s exports,” it
warned.

– Paris newsroom +331 4271 5540: ssandelius@marketnews.com

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