Global oil demand this year will reach the highest level since 2007, with rising consumption led by faster growth in emerging economies in Asia, the International Energy Agency said today.
The Paris-based adviser to 28 industrialised economies revised upwards by 10,000 barrels per day (bpd) its expectations for higher global oil demand this year. It now sees demand increasing by 1.4 million barrels per day in 2010.
Outright demand will be 86.3 million bpd, still lower than the 86.5 million bpd used in 2007. Consumption has fallen for the last two years.
"Oil demand in China and Asia has been revised higher by 70,000 bpd from last month, which has more than offset a revision of 60,000 bpd in the OECD," said David Fyfe head of the oil industry and markets division of the IEA.
"By 2011, we're expecting something like another 1 million bpd of growth, but it hinges on the economic recovery."
Growth of 1 million bpd would take global oil demand in 2011 above the record level seen in 2007 before the economic crisis slashed consumption.
Fyfe said the cold winter hitting many members of the Organisation for Economic Cooperation and Development was likely to have a limited impact on oil demand.
Crude oil prices surged to 15-month highs close to $84 a barrel in early January, with cold winter weather in much of the northern hemisphere raising expectations of higher oil demand.
"The cold wave that hit the northern hemisphere in the past few weeks has led many observers to predict a surge in oil demand driven by heating and power generation needs, and an erosion of OECD distillate stocks," the IEA said.
"However, such reasoning overlooks the fact that the already relatively small share of oil for heating and power generation is shrinking in the OECD."
The IEA said crude supply from the Organisation of the Petroleum Exporting Countries edged higher in December, rising by 75,000 bpd to 29.1 million bpd - the same total the IEA estimates Opec needs to produce to balance the market in 2010.
In addition to rising crude output from Opec members, the IEA sees production of OPEC natural gas liquids - which are not subject to the group's output targets - rising by 885,000 bpd to 5.7 million bpd.
Supply from countries outside of Opec was revised lower by almost 200,000 bpd from November's forecast, primarily because of a reappraisal of production in Azerbajan, the IEA said.
Non-Opec output is now expected to rise to just 51.5 million bpd, with growth driven by biofuels and higher crude production in Brazil, the Former Soviet Union, Australia, Colombia and India. Non-Opec supply was 51.3 million bpd in 2009.
Oil inventories in OECD countries fell to the equivalent of 59.1 days forward demand cover at the end of November, down from 59.4 days at the end of October, the IEA said.
Crude oil in short-term floating storage fell to 51 million barrels at the end of December from 55 million barrels at the end of November, the IEA said.
Reuters