Crude Tumbles Again as IEA Lowers Oil Demand Forecast

[Purveyor]

By Paul Ausick October 14, 2014 9:25 am EDT

The International Energy Agency (IEA) released its October Oil Market Report Tuesday morning, and it is even gloomier for oil producers than last week’s report from OPEC. The IEA has cut its 2014 demand growth forecast from 900,000 barrels a day to 700,000 barrels, or a total of 92.4 million barrels a day. In August the IEA had pegged demand growth at a million barrels a day.

The IEA said global supply rose 910,000 barrels a day in September and is currently 2.8 million barrels a day. The agency said non-OPEC supply growth is up 2.1 million barrels a day in 2014 and estimates that 2015 non-OPEC supply growth will reach 1.3 million barrels a day.

In its latest Short-Term Energy Outlook, the U.S. Energy Information Administration forecasts global crude oil demand growth of 1.0 million barrels a day in 2014 and 1.2 million barrels a day in 2015. Global production is expected to rise by 1.6 million barrels a day in 2014 and 900,000 barrels a day in 2015.

In last Friday’s October Oil Market Report, OPEC affirmed its estimate of demand growth for 2014 at 1.05 million barrels a day. The cartel also said that non-OPEC supply will grow at a rate of 1.68 million barrels a day in 2014 and 1.24 million barrels a day in 2015. More troublesome is that demand for OPEC crude in 2014 is currently forecast at 29.5 million barrels a day and the cartel was producing nearly 1 million barrels a day more than that. Demand for OPEC crude is forecast to fall to 29.2 million barrels a day next year.

All the numbers are slightly different, but they all tell the same story: crude oil demand is falling and taking prices lower as it goes. West Texas Intermediate (WTI) crude oil for December delivery is down about 1.5% early Tuesday morning at around $83.80. Brent crude is down about 1.9% at $87.74. A stronger dollar is contributing the price drop, but mainly the slide is telling us that the world is oversupplied with oil.

Read more: Crude Tumbles Again as IEA Lowers Oil Demand Forecast - 24/7 Wall St. http://247wallst.com/energy-economy/2014/10/14/crude-tumbles-again-as-iea-lowers-oil-demand-forecast/#ixzz3G941mEz2

[belzabubba333]

1. global warming is gonna put opec out of business

"the slide is telling us that the world is oversupplied with oil." the price of gas isnt sky high that means the world is over supplied? over supplied in your eyes not enough in mine

[Dirty Socialist]

2. DRILL BABY DRILL!

Boehner says it will solve our economic problems, LOL!

[louis-t]

3. Speculators are jumping ship.

I suspect that is about 20% of the slide.

[underpants]

4. Green energy cutting demand while franking increasing supply?

Honestly I am just asking. I've never understood the oil market.

A coworker told me that ISIS is selling at $50 a barrel. No idea if that is just some cockamamie Fox News crap or not.

[durablend]

5. Be nice if gas stations would follow suit

Many of them around here seem to be pocketing the difference with no intention on lowering it.

[HereSince1628]

6. Seems like price dropped ~10 cents in SE WI in the past week.

Our taxes on gasoline aren't as stiff as N. Ill, but still, my guess is without those taxes we'd be very near breaking under $3 per gal

[sweetloukillbot]

7. Dropped about 50c over the past month in AZ

I paid $3 a gallon yesterday - first time in ages.

[hack89]

9. Prices are plummeting in Rhode Island. nt

[hack89]

8. This is a disaster for Russia and Venezuela

they are so dependent on oil revenues. In VZ, they make up 95% of the government's revenue. Russia is a huge exporter of oil - not what they needed on top of sanctions.

[amandabeech]

10. Yeah, both of those countries are in trouble.

Fracking in the US is very expensive as well as very likely highly damaging to the environment.

If oil prices stay at this level or go lower, expect that new wells will be put on hold and some wells may be mothballed. A fracked barrel may cost $70-$75 to produce.

[hack89]

11. I am not a supporter of fracking

but it certainly has upset the global oil status quo.

[amandabeech]

12. I'm not a fan, myself.

You are certainly right about it upsetting the status quo, and not only here in the US.

It is a balancing factor against aggressive moves by the big conventional oil producers, even though it takes some time to ramp up.

Much more can be done with renewables, but the portability and energy density of oil products really makes them ideal for some applications, particularly transportation in areas without good renewable potential.