The International Energy Agency hiked its forecasts for global oil demand for this year and the next and lifted its projections for non-OPEC supply in 2013, the agency said in its Monthly Oil Market Report on Wednesday.
Despite the upward forecast revision for 2013, the IEA still said it expects "relatively sluggish demand growth" over the year, "as global economic expansion remains tepid."
IEA hiked its forecasts for 4Q global demand by 435 kb/d over last month to around 90.5 mb/d, more than reversing the previous forecast's 300 kb/d cut. Forecasts for overall demand this year and the next were increased by 100 kb/d to 89.7 mb/d and 90.5 mb/d, respectively.
The IEA said the relatively stable demand forecasts for 2012 overall have also been masked by mutually offsetting revisions in certain regions and quarters.
Global oil production increased by 730 kb/d to 91.6 mb/d in November. With non-OPEC production rebounding "strongly" in November to 54.0 mb/d, the IEA revised up its forecasts for non-OPEC 4Q supply by 30 kb/d to 53.8 mb/d. For next year, the agency expects non-OPEC production to rise by 890 kb/d - the fastest pace since 2010 - to 54.2 mb/d.
Overshadowed by the jump in non-OPEC output, OPEC supply rose by "a marginal" 75 kb/d to 31.22 last month, the agency noted. OPEC crude supply increases were led by Saudi Arabia, Angola, Algeria and Libya. This was partly offset by a one-off downturn in Nigeria due to weather and ongoing cutbacks in Iran due to sanctions and shipping constraints.
With OPEC ministers meeting in Vienna later Wednesday, the IEA said the group was "widely expected" to keep its output ceiling at the current target of 30 mb/d given the stable prices, despite production over the year averaging 1.5 mb/d above the target.
The IEA hiked its "call" on OPEC crude and/or stocks by 400 kb/d for 4Q, but left its "call" for 2013 unchanged at 29.9 mb/d. OPEC's 'effective' spare capacity last month was lowered to 2.49 mb/d from 2.51 mb/d in October, the agency added.
OECD commercial stocks fell by 16.2 million barrels in October to 2.722 billion barrels, following seven consecutive months of increases, the agency reported, adding that preliminary data suggested a further draw in November.
Crude oil price volatility has moderated since the start of the year and prices have been easing "gently" in recent months, but the IEA said this masked some regional volatility and uncertainty. Plunging European demand in 3Q was offset by robust Asian demand, causing "an apparent acceleration in the eastward shift of global oil demand growth."
"There is a clear contrast not only in oil demand trends, but also in economic growth between Europe and Asia. North America falls somewhere in the middle. Everywhere, uncertainty prevails," the IEA wrote. "Whether the recent plunge in European oil demand is part of a trend or just a one-off is unclear. Early data show demand bouncing back in October, but may be revised."
WTI crude futures fell by $2.84/bbl in November to $86.73/bbl while Brent was down just under $2/bbl to $109.53/bbl according to IEA. The benchmark crudes inched down further in early December, with WTI last trading at $85.90/bbl and Brent at $107.85/bbl.
Still, IEA noted that Brent futures prices are on track to surpass 2011 record levels this year, buoyed by "heightened political risks" in key suppliers.
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