The International Energy Agency (IEA) raised its monthly forecast for crude oil demand growth in 2013 by 235,000 barrels a day, from a prior estimate of 865,000 barrels a day to 930,000 barrels a day. That translates to total demand of 90.8 million barrels a day for this year.
The agency also lifted its estimate of demand growth in 2012 from 850,000 barrels a day to 975,000 barrels a day. The change was based on higher consumption in China, the United States and Brazil.
The IEA also noted that it does not expect the demand growth to be met by additional supply from non-OPEC producers. That led to the conclusion that OPEC would need to produce more to meet the rise in demand.
OPEC, and particularly Saudi Arabia, have throttled production recently, which the IEA says is “driven less by price considerations than by the weather.” The end of the Saudi summer typically reduces demand for electricity for air conditioning, and most of Saudi Arabia’s electricity is generated by oil-fired power plants.
West Texas Intermediate (WTI) prices rose to a four-year high yesterday, topping $96 a barrel in intra-day trading. Prices have moderated somewhat today, with WTI trading down about 0.2% at $95.28 and Brent trading at $110.74. The WTI-Brent differential has fallen below $15 a barrel for the first time in more than four months.