(EnergyAsia, July 31 2014, Thursday) — Amid signs that the global economy could be slowing again, the US Energy Information Administration (EIA) has scaled back its forecasts for global oil demand growth for 2014 and 2015 in its July report.

The agency now expects the world to consume 91.62 million this year and 93.08 million b/d in 2015, said the US agency, down from its record-high June forecasts for 91.79 million and 93.12 million b/d for the two respective years.

In May, it had forecast global oil consumption to reach 92.80 million b/d in 2014 and 91.56 million b/d the following year.

The July forecasts call for global oil demand to grow by 1.25% in 2014 and 1.59% in 2015.

Japan and Europe will drag down the combined oil use of the developed world over the next two years, said the EIA. Japan’s oil consumption is seen falling by 130,000 b/d in 2014 and by a further 160,000 b/d in 2015 as the country continues to increase the use of natural gas and coal to generate electricity while restarting some of its nuclear power plants.

After falling by 110,000 b/d in 2013, OECD Europe’s oil consumption is expected to decline by 120,000 b/d in 2014 before rebounding by 60,000 b/d in 2015.

The EIA expects US liquids consumption, which increased by 400,000 b/d in 2013, to remain largely unchanged in 2014 and to rise by 70,000 b/d in 2015.

On the supply side, the EIA expects non-OPEC liquids production to grow by 1.74 million b/d to 55.84 million b/d in 2014 and by a further 0.97 million b/d in 2015, thanks largely to rising supplies out of the US and Canada. The combined production from North America is expected to rise from 19.31 million b/d in 2013 to 20.91 million b/d in 2014 and 21.91 million b/d next year.

The EIA took note of the rising geopolitical uncertainty in Iraq and Syria but made no mention of the worsening tensions between Russia and the West, although it mentioned that it does not “assume disruptions to oil supply or demand as a result of ongoing events in Ukraine.”

The agency said it has reduced its forecast production growth in Iraq by about 300,000 b/d in both 2014 and 2015, with output unlikely to exceed 3.3 million b/d.
The loss of Iraqi oil will be partly compensated by Saudi Arabia which the EIA expects will boost and maintain production level through 2014.

“Unplanned supply disruptions among non-OPEC producers averaged 600,000 b/d in June, down from an estimated 700,000 b/d in May. South Sudan, Syria, and Yemen accounted for 83% of total non-OPEC supply disruptions,” it said.

Libya lifted its force majeure on oil exports from the two main eastern oil ports of Es-Sidra and Ras Lanuf which have a combined export capacity of 550,000 b/d after rebel forces agreed to return them to the government.

Although the deal is a major step forward, the EIA expressed doubts that it will lead to a sustained recovery in Libya’s oil exports given the fragility of the situation and the failure of past deals. In April 2014, a similar deal was made to return control of two smaller eastern ports at Marsa al-Hariga and Zueitina with combined export capacity of 200,000 b/d. The deal did not lead to a substantial increase in production and exports because rebels continued to stage sporadic blockades of oil flows.

July 2014: EIA’s world liquids demand forecast, in million b/d
2013     2014 *    y/y %    2015 *    y/y %
N.America        23.29     23.30    0.04       23.41    0.47
China                 10.66     11.05     3.66       11.49     3.98
Others               56.54      57.27    1.29       58.18     1.59
TOTAL             90.49       91.62   1.25       93.08    1.59
* forecasts