IEA raises global oil demand forecast

Oct. 13, 2010 at 1:23 PM
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PARIS, Oct. 13 (UPI) -- Citing stronger-than-expected economic growth, the International Energy Agency Wednesday revised upward its oil demand forecast for 2010 and 2011.

Demand for crude will average 86.9 million barrels a day in 2010 and 88.2 million barrels a day next year, the IEA, which advises rich countries on energy issues from its headquarters in Paris, said in its monthly Oil Market Report released Wednesday.

The IEA said it increased its forecast from previous levels by 300,000 barrels per day, citing stronger-than-expected third-quarter economic growth in the Organization for Economic Cooperation and Development nations. The group warned, however, that the recovery might not last, especially in the United States.

Global demand is driven mainly by growth in emerging economies such as China and Brazil China. Chinese oil demand will rise 9.3 percent this year and 4.2 percent in 2011, the IEA said.

"Emerging economies have clearly become key players," the IEA said. "Meanwhile, mature economies are struggling."

The report was released on the eve of an OPEC summit in Vienna, where oil ministers are expected to call for maintaining current quotas.

Prices for crude have been trading near five-month highs during the past weeks, creeping up to almost $85 a barrel.

Oil reserves in OECD countries rose by 15.8 million barrels to 2.79 billion barrels, equivalent to 61.1 days of consumption. That's the largest stockpile since more than 12 years and the second-highest level since the report started in 1984, the IEA said.

However, reserves might have to be unlocked if a strike at a French oil port is continuing, observers say.

For the past two weeks, strikers have denied sea access to and from the Fos-Lavera terminal, leaving several dozen ships stranded in the Mediterranean.

"By some estimates the strike could continue during the next two weeks and lead to product shortages," the IEA warned. "The strike is pushing European product cracks and refining margins higher, drawing in products from abroad and likely encouraging other refiners to increase run rates."

Central France could experience fuel shortages as early as this weekend, observers say. Prices for gasoline have already soared and U.S. diesel tankers are steaming toward Europe to satisfy the demand.

However, "if the Fos-Lavera port remains blocked, logistics of delivering the products to end-users in the region could be significantly hampered," the IEA warned.

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