As oil price increases supported by increasing demand be...

As oil price increases supported by increasing demand be prepared to see the interest in the oil sector return with Gusto



IEA Raises 2010 Oil Demand Estimate on Developing Economies
Share Business ExchangeTwitterFacebook| Email | Print | A A A By Alexander Kwiatkowski

March 12 (Bloomberg) -- The International Energy Agency raised its forecast for global oil demand this year for a second month as fuel consumption in Asia rises more than expected.

The IEA increased its estimate for world demand in 2010 by 70,000 barrels a day to 86.6 million barrels a day. That would mean a gain of 1.6 million barrels a day, or 1.8 percent, from 2009 levels, it said. Economies outside the Organization for Economic Cooperation and Development continue to lead the recovery in consumption, the IEA said.

?Global oil demand resumed growth on a yearly basis in the fourth quarter of 2009 after five consecutive quarters of decline,? the Paris-based agency said in its monthly oil market report today. ?This year?s global oil demand growth will be driven entirely by non-OECD countries, with non-OECD Asia alone representing over half of total growth.?

China will account for almost a third of global oil demand growth this year, according to IEA estimates, offsetting stagnant consumption in developed economies, particularly Europe. This growth could be revised upward as the Chinese government signals it will continue to foster economic growth as long as inflation pressures remain moderate, according to the agency.

Oil consumption in non-OECD countries is forecast to average 41.2 million barrels a day in 2010, an increase from last year of 1.7 million barrels a day, or 4.3 percent, according to the IEA. That is 190,000 barrels a day more than the agency estimated last month.

?Astonishing? China

Preliminary data indicate Chinese apparent demand surged by an ?astonishing,? 28 percent year-on-year in January, with the biggest increase in naphtha demand, according to the IEA. The agency raised its 2010 demand forecast for China by 130,000 barrels a day to 9 million barrels a day, representing an increase of 6.2 percent from 2009.

In contrast, the IEA cut its forecast for oil consumption in OECD countries by 120,000 barrels a day from last month to 45.4 million barrels a day. That means it now expects demand in those economies to shrink 0.3 percent this year.

Even as consumption rises globally, the IEA also cut the estimate for the amount of crude OPEC will need to pump to balance demand and supply as production estimates from outside the group rise. The agency estimates that the Organization of Petroleum exporting countries will have to produce 29.3 million barrels a day this year, 100,000 barrels a day fewer than it estimated last month.

OPEC Meeting

OPEC, which accounts for more than a third of global supply, will meet in Vienna next week to decide on production quotas. Members pumped the most in 14 months in February, according to the IEA, with Iraq accounting for more than half the monthly increase.

OPEC?s compliance with record supply cuts announced in 2008 slipped to 56 percent in February, from 58 percent the previous month, the IEA said. The group?s 11 members bound by production quotas raised output by 80,000 barrels a day to 26.70 million a day last month. That means OPEC exceeded its collective target by about 1.9 million barrels a day.

Non-OPEC production is now estimated at 51.8 million barrels a day in 2010, an increase of 330,000 barrels a day from 2009, a stronger outlook from the North Sea, Egypt, Russia, Thailand and Colombia, as well as revisions to Canada?s production data, the IEA said. That is 205,000 barrels a day more than it forecast last month.

Industry-held oil stockpiles in OECD countries climbed in January to 2.703 billion barrels, a ?slightly higher,? increase than the five-year average, according to the IEA. Supplies were the equivalent of 59.2 days of demand at the end of the month, up from 58.3 days at the end of December.

Preliminary data suggest stockpiles dropped by 28.6 million barrels last month, the agency said.