RIYADH: Crude fundamentals are faced with headwinds. Global oil demand is now projected to rise less in 2014 than previously thought, the International Energy Agency said in its Monthly Oil Report last week.

Demand growth is to average 1.29 million barrels per day (bpd) in 2014, 60,000bpd 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.

The demand growth in China is getting sluggish. “A slowdown in Chinese oil demand growth that emerged in mid-2013 has continued in line with the underlying macroeconomic trend. Demand for industrial fuels has been particularly soft,” IEA said in its April report.

China’s economy grew at its slowest pace in 18 months in the first quarter of 2014, official data revealed. The implied oil demand of China fell 0.6pc in the first quarter of the year, dampening its energy use.

And in the meantime, output is on rise — virtually all around. The International Monetary Fund (IMF) is also now pointing to a supply surge in North America. Combined, North American production growth is around 1.2 million barrels per day, from US shale oil and Canadian oil sands, the IMF said.

A US Energy Information Administration reports says US oil production was anticipated to average 8.4 million bpd in 2014, a 14pc increase from last year. And by next year, it is projected to touch even higher 9.1 million bpd. Long-term, EIA says, US oil imports should continue to decline through 2036 and approach near zero through 2040.

US proven reserves of crude oil at year end 2012 were also estimated at 33.4 billion barrels, up 15.4pc from 2011 and the highest since 1976, EIA said.

On the other hand, Canada’s total crude oil output is also expected to touch 3.9 million bpd in 2015, some 500,000bpd more than the current output, driven primarily by small in-situ oil sands developments, each typically 35,000-40,000bpd, Platts said quoting industry sources.

In the meantime, Libyan crude is also slowly and gradually creeping back into the global markets. Agreement between the rebels and the central government in Tripoli has resulted in some oil export related activity at the export terminals in eastern part of the country.

And courtesy the opening of the giant, untapped, West Qurna-2 field, Iraq, the Opec’s second biggest producer after Saudi Arabia, has now been pumping crude at a35-year high level of 3.4 million barrels a day, data compiled by Bloomberg said.

Iran too raised its crude output last month to 2.9 million barrels a day, an increase of 65,000 barrels from February, data showed.

On the other hand, energy thirsty Beijing’s reserves climbed to 1.08 billion tonnes, exceeding the 1bn tonne mark for seven consecutive years, the Ministry of Land and Resources of China said earlier the year. Chinese natural gas deposits also rose sharply, with new proven reserves totalling 616.4 billion cubic metres in 2013.

New technology on horizon is also impacting. US Navy scientists are reporting to have solved one of the world’s great challenges: how to turn seawater into fuel. The breakthrough came after scientists developed a way to extract carbondioxide and hydrogen gas from seawater. The gasses are then turned into a fuel by a gas-to-liquids process with the help of catalytic converters.

The new fuel is initially expected to cost around $3 to $6 per gallon, according to the US Naval Research Laboratory, which has already flown a model aircraft on it.

US Energy Secretary Ernest Moniz in a 32-page report on the department’s strategic plan is underlining the US economy needs a break from oil.

The overall picture is not too healthy — one can’t help underlining!