LONDON, Sept 12 (Reuters) - Global oil supplies look comfortable despite a massive outage in Libyan output and oil prices could see some downward pressure if sharp currency depreciation in emerging markets leads to softer demand, the International Energy Agency (IEA) said.
The IEA, which coordinates energy policies for developed economies, said global oil supply was set to jump in the next months thanks to a mix of seasonal, cyclical and political factors and notwithstanding the Libyan problems.
“While the geopolitical storms in the Middle East and North Africa have yet to pass, easing fundamentals look set to lessen the pressure somewhat on market participants - at least for the next few months,” the IEA said in its monthly report.
Oil prices rallied to sixmonth highs in August amid expectations of Western military strikes in Syria and as Libyan production plunged to a tenth of capacity due to protests at fields and terminals in the worst disruption since the 2011 revolution.
But the IEA said even if Libyan production remained disrupted for the rest of the year, the winding down of seasonal field maintenance in the North Sea and the U.S. Gulf of Mexico shall bolster supply in the fourth quarter of 2013.
“New North American production - including U.S. light tight oil and Canadian synthetic crude - continues to surge. Saudi production is hovering near record highs, even as a seasonal dip in domestic air-conditioning demand looks set to free up more barrels for export,” it added.
The agency left its global demand growth estimates for 2014 broadly unchanged compared to its report last month at 1.1 million barrels per day, up from 895,000 bpd in 2013, as it said the underlying macroeconomic situation improved.
Global oil demand is projected to average 92.0 million bpd in 2014. But it said demand could see some downward pressure in emerging economies whose currencies have depreciated steeply in recent months.
As oil is priced in U.S. dollars, when an oilimporting country’s currency falls versus the U.S. unit, its oil import bill in the domestic currency rises.
Some currencies in Asia and Latin America have been hit hardest by expectations that the U.S. Federal Reserve will slow its bond-buying programme, which would lead to a strengthening of the dollar.
The Indian rupee lost nearly onethird of its value in the four months to the end of August and other countries such as Indonesia, Malaysia, Peru, the Philippines and Thailand have also seen their currencies weaken.
“If sustained, this may ultimately curb their demand trend or, in countries where oil subsidies are in place, raise pressure on their governments to reduce those subsidy programmes,” the IEA said. (Reporting by Dmitry Zhdannikov and Christopher Johnson; Editing by Dale Hudson)