Last week saw a spate of new forecasts for the global economy and the demand for oil during 2009. The International Monetary Fund and the World Bank issued forecasts that were much bleaker than those issued by private forecasters. Both foresee the world economy shrinking for the first time since World War II.
The three major oil forecasting organizations, the US’s EIA, the OECD’s IEA and OPEC, also issued increasing pessimistic numbers during the week. The EIA now foresees a 0.8 percent reduction in the world GDP during 2009 with a 2.6 percent rebound in 2010. Average annual world oil consumption is seen as shrinking by 1.4 million barrels in 2009. This is 3 million b/d lower than the forecast six months ago.
The IEA now foresees global demand for oil in 2009 shrinking by 1.2 million b/d to 84.4 million b/d, a drop of 270,000 b/d since last month. The agency sees non-OPEC supply as stagnant at 50.6 million b/d during 2009. Problems in Azerbaijan and the major drop in Mexican production are seen as offsetting increases elsewhere. Despite the economic problems, the IEA still foresees Chinese demand increasing by 0.6 percent during 2009.
The IEA continues to warn that the OPEC production cut of 4.2 million b/d, which they seem likely to accomplish, will continue for several months and that there is no growth in non-OPEC production, so world stockpiles will drop swiftly unless, of course, demand falls more than the 1.2 -1.4 million b/d currently forecast. The heart of the issue remains the course of the global economy and the success of the many stimulus initiatives currently underway.