OREANDA-NEWS. The IEA has revised up its forecast for global oil demand growth this year by 280,000 b/d to 1.4mn b/d, taking demand to just under 94mn b/d. The revision in the latest monthly Oil Market Report (OMR) leaves the IEA's forecast for the year more than 200,000 b/d higher than Opec's latest projection.

Demand in the first half of this year has been stronger that the IEA previously expected. "All four of the world's largest oil consuming countries posted higher-than-expected and rising year-on-year deliveries in the first half of 2015, while long-lagging Europe has grown and the world's fifth-largest consumer — Russia — has declined at a less rapid pace than previously forecast," the Paris-based energy watchdog said.

The strong rise in demand has been supported by additional economic growth, colder winter weather conditions in Europe than a year earlier, and lower prices. But "there are doubts that this trio will persist in the second half of 2015," the IEA said.

It forecasts that demand growth will subside to 1.2mn b/d in the second half of the year from 1.6mn b/d in the first half. The slowdown is driven by a projected deterioration in OECD growth "as lower-price support potentially wanes and initial post-recessionary bounces in many countries fade", the IEA said.

On the supply side, the IEA notes that it is taking time for lower oil prices and a drop in upstream capital expenditure to curb non-Opec output. It forecasts that non-Opec production this year will be 970,000 b/d higher than last year at just under 58mmn b/d. Last month's OMR projected non-Opec supply growth of 830,000 b/d. The upwards revision is underpinned by a higher US supply growth forecast and fewer summer maintenance shutdowns in the North Sea and the former Soviet Union than previously forecast. The IEA has revised up its projection for US liquids output growth this year to 790,000 b/d from 680,000 b/d in last month's OMR. Production data from the US EIA point to stronger output gains in the US in the first quarter than previously estimated. But the slowdown in drilling activity is starting to have an impact, albeit partly offset by improvements in drilling efficiency and productivity in key output areas, the IEA said. It expects US liquids production this year to peak at 12.81mn b/d this quarter before falling to 12.46mn b/d in the third quarter and then recovering to 12.63mn b/d in the fourth quarter.

The IEA expects Opec to keep pumping around 31mn b/d of crude over the coming months "as Middle East producers sustain higher rates to preserve market share and meet summer domestic demand". It has lifted its forecast for the call on Opec crude in the second half of the year to 30.2mn b/d from just over 30mn b/d in last month's OMR because of the upwards revision to its demand growth forecast. But call on Opec crude for the full year is pegged at 29.4mn b/d, below the group's 30mn b/d agreed production level.