Supply risks to keep oil prices steady in 2012

Oil prices are unlikely to fall much further over the balance of this year but could come under pressure in 2013 as the global economy falters due to slower US and Chinese growth, the IEA said on Thursday.?

The International Energy Agency (IEA), which advises developed countries on energy policy, said supply risks appeared to have put a floor under prices for this year even as global economic growth slows.

But for 2013, oil prices could fall in real terms by more than 7 per cent, based on current models and futures contracts, it said, adding that such a downturn should marginally support demand.

Global economic growth this year will likely come in at 3.3 per cent, down from the previous estimate of 3.5 per cent as an ?exceptionally challenging macroeconomic backdrop? forced the IEA to change its forecasts.?

For 2013, the global economy should grow 3.8 per cent, down from the previous 4.1-per cent estimate based on figures in April from the International Monetary Fund, it added.

?Concerns are mounting on the sustainability of the eurozone, there has been a definite easing in China?s economic impetus and the US outlook has weakened,? the IEA said in its latest monthly report.?

?Ongoing debt concerns across the developed world will likely see associated austerity measures curtailing government, business and consumer expenditure levels alike,? it said.

The IMF is expected to issue new economic growth forecasts shortly.?

Brent oil prices sank back under $100 per barrel as the US Federal Reserve?s minutes from last month?s key policy meeting showed no definite action plan or timeline for further stimulus measures.?

Brent North Sea crude for delivery in August slid $1.14 to $99.09 per barrel in late afternoon deals in London.?

New York?s main contract, light sweet crude for August, dropped $1.35 to $84.46.?

In terms of oil demand, the IEA left its 2012 growth forecast at around 800,000 barrels per day (bpd) to around 89.9 million bpd, with 2013 gaining a ?relatively muted? 1mbd to 90.9mbd, led by Asia.?

The rise next year, while marginally more than the expected 2012 gain, was much less than would have been expected based on trends before the 2008 global financial crisis brought the economy to its knees, it said.?

The euro zone debt crisis has since undercut growth further. The IEA said that total global oil supply in June was down 500,000bpd to some 90.4mpd, with Opec production slipping 100,000bpd to 31.8mpd.?

Among Opec members, the IEA noted that Iranian output had slumped to near 22-year lows at 3.2mbd in June, down 100,000bpd from May as US and EU sanctions ramp up from July 1.

Copyright 2012, AFP. All rights reserved.

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Source: http://www.oilandgaseurasia.com/news/p/0/news/15609/

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