RIYADH: Mid-term crude outlook is now hazy. Ominous clouds are on horizon. And crude markets could stay weak into 2013 too, despite some blips on the chart, here and there. The Paris based IEA, the Opec and the US EIA – all seem to be underlining the same message now.

Global economic slowdown could put a lid on oil prices, the International Energy Agency said in its just released oil report. It underlines that oil market fundamentals had “clearly eased since the start of the year” and stocks had built up significantly over the last few months.

Concern that global demand may falter further got a fillip after South Korea unexpectedly cut interest rates, Australia’s jobless rate rose and economists said European manufacturing stagnated last month.

A major impact on crude demand growth is coming from China, the world’s second largest consumer. China’s implied oil demand fell 0.4 per cent in June from a year earlier to the lowest in 20 months as refineries scaled back production and raised fuel exports to trim bulging stockpiles, caused by a lack of buyers and losses resulting from the government cutting fuel prices for consumers three times over the past two months.

Chinese implied oil demand has contracted for the second time so far this quarter, and that is likely to further dampen global oil prices.

Thus with global economic horizon turning cloudy, the IEA reduced its demand forecast for demand in 2012, cutting it by 15,000 b/d to 89.89m bpd. For 2013, the IEA estimates world oil demand at 90.9 million bpd.

Opec is also on the same page on the issue. World oil demand growth will slow in 2013 from the already weak 2012, Opec said in its monthly report, citing Europe’s debt worries, a faltering US economic recovery and deceleration of growth in emerging markets.

“Besides the eurozone crisis, geopolitical tensions in the Middle East, the contraction of manufacturing in the US for the first time since 2010 and decelerating economic growth in emerging markets have been fuelling uncertainties regarding global economic growth,” Opec said in a monthly report. Global oil consumption will rise (only) by an average of 900,000 barrels a day this year, or about 1 per cent, Opec projected in its monthly report. Growth will however, slow further in 2013 to 800,000 barrels a day as the global economy cools, the 12- member producers’ group’s first assessment for next year said.

“The fact that the departure of Greece from the eurozone, with a severe impact on the eurozone economy, still cannot be ruled out remains a cause of concern,” Opec added. “Such an action would provoke a massive capital outflow from the country and result in a default of its fiscal obligations, with a destabilising effect on the eurozone and beyond.”

Earlier last week, the US government energy agency, the EIA too cut its global oil demand growth estimate for 2013 by 360,000 bpd to 730,000 bpd only.

In the meantime, supplies are outstripping demand too, impacting the balance further. The IEA said the 12 members of Opec pumped close to 31.8 million bpd in June. This helped increase the global oil inventories.

And in the meantime, non-Opec output is also high and rising, the IEA said, forecasting an overall increase of around 700,000 bpd in 2013 to 53.2 million bpd. Much of this increase is to come from the US where production of light crude oil from shale deposits in Texas, North Dakota and other mid-western states is rising sharply.

Markets continue to be oversupplied, while a sort of demand destruction is taking place, impacting the crude markets as it prepares to enter 2013. While energy geopolitics continuing to sway markets, crude prices are in for some more battering in the months ahead, one could now say with some degree of confidence.