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IEA cuts oil demand growth forecast

Friday, April 11 10:42:00

World oil demand will rise less than previously thought in 2014, the International Energy Agency said today, due to a lower outlook for Russia's economic growth following its annexation of Crimea.

The agency, which advises industrial countries on oil policy, also reduced its forecast for non-OPEC supply this year, which will increase the need for crude from the Organization of the Petroleum Exporting Countries.

Global demand growth will average 1.29 million barrels per day (bpd) in 2014, the IEA said in its monthly Oil Market Report. That is 60,000 bpd lower than its previous forecast.

"Downward adjustments to the forecast of Russian oil demand for 2014 helped trim the global demand growth estimate," the report said. "Developments in Crimea have weakened Russia's macroeconomic outlook."

The Paris-based IEA is the only one of the three main government oil forecasters to trim its 2014 demand growth projection in reports this week.

Its view follows lowered Russian economic growth outlooks from the International Monetary Fund and World Bank.

Brent crude edged down after the report's release and as of 0845 GMT was off 31 cents at $107.15 a barrel.

The IEA lowered its view on 2014 supply from non-OPEC countries, which pump about three in every five barrels. The agency now expects supply outside OPEC to rise by 1.5 million bpd this year, 250,000 bpd less than it projected last month.

Accelerated rates of decline at older Russian oilfields accounted for part of the reduced supply forecast as did a lower estimate for Kazakhstan, where the giant Kashagan oilfield may fail to restart this year.

"While non-OPEC supply growth is still forecast to be the highest in decades, expectations are being toned down somewhat," the report said.

Supply from OPEC declined by 890,000 bpd in March to 29.62 million bpd, according to the IEA, which said the group would have to pump more in the second half of the year.

"OPEC, far from facing a supply glut, will have to raise production from March levels," the IEA said.

In reports issued this week, OPEC left its 2014 demand growth projection unchanged at 1.14 million bpd, while the U.S. government's Energy Information Administration raised its forecast by 10,000 bpd to 1.23 million bpd. (Reuters)