IEA Cuts Demand Estimate, Says Venezuela Oil Industry May Suffer

March 13 (Bloomberg) -- The International Energy Agency trimmed global oil demand forecasts for a second month amid “elusive” economic growth, and warned that Venezuela’s oil industry may suffer following the death of leader Hugo Chavez.

The agency curbed estimates for global fuel consumption in 2013 by 60,000 barrels a day, predicting demand will increase by 820,000 barrels a day, or 0.9 percent, to 90.6 million barrels. Venezuela, OPEC’s fourth-biggest producer, “could see a further degradation of the state oil company and the country’s oil prospects” if Vice-President Nicolas Maduro is elected to succeed Chavez next month, the IEA said in its monthly report.

“We still have the debt crisis in Europe, in the U.S., and the fact that oil prices have not come up shows how bearish the situation is,” said Gerrit Zambo, an oil trader at Bayerishes Landesbank in Munich. “The fundamental situation is well- supplied, and there’s no danger of shortages.”

Brent futures have lost 1.3 percent this year, trading at about $110 a barrel in London today. Worsening unemployment in Europe as the continent struggles to move beyond its debt crisis, faltering business confidence in China and budget cuts in the U.S. will continue to constrain oil demand, the IEA said. Prices are high enough to limit fuel consumption, it said.

Demand Cut

The Paris-based IEA curbed forecasts for crude from the Organization of Petroleum Exporting Countries in 2013 by 100,000 barrels a day, to 29.7 million a day, because of extensive maintenance work at refineries.

OPEC is pumping about 800,000 barrels a day more than this level after boosting output last month by 150,000 barrels a day to 30.49 million, the IEA’s report showed. The increase was led by Iraq, which raised production in February by 170,000 barrels a day to 3.14 million. Saudi Arabia, the group’s largest member, kept output unchanged at 9.25 million barrels a day.

Consumers increased crude imports from Iran, OPEC’s third- biggest producer, last month to 1.28 million barrels a day from 1.13 million in January despite the imposition of additional U.S. sanctions last month, the IEA said.

Venezuela’s investment in oil exploration and production may extend a long-term decline if Chavez’s “anointed successor” is elected, according to the IEA.

Output from Venezuela fell 22 percent in the 14 years since the election of Chavez, who died March 5. An election of Maduro, Chavez’s handpicked successor, may continue the policy of using profits from state-owned oil company Petroleos de Venezuela SA to fund social welfare projects, it said.

The agency increased estimates for supplies outside OPEC in 2013, by 60,000 barrels a day. Non-OPEC producers such as the U.S., Canada and Brazil will bolster production by 1.1 million barrels a day this year to 54.5 million a day.

Oil inventories in the most industrialized nations were 4.4 million barrels less than their five-year average, after increasing by less than the normal amount in January, according to the report. Stockpiles rose by 22.5 million barrels to 2.7 billion barrels.

--Editors: Raj Rajendran, Stephen Cunningham