MW: Crude rises above $82 a barrel as IEA hikes forecasts
By Polya Lesova & Nick Godt, MarketWatch
NEW YORK (MarketWatch) -- Crude futures rose above $82 a barrel on Friday, as the International Energy Agency raised its forecast for global oil demand, citing strong growth in China and other emerging economies.
Adding to a more upbeat economic outlook was news U.S. retail sales rose a better-than-expected 0.3% in February.
Crude oil for April delivery gained 53 cents, or 0.7%, to $82.63 a barrel in electronic trading on Globex. Oil prices finished virtually unchanged on Thursday and are up 1.3% for the week so far.
"Continued economic optimism buoyed the oil price above the mark of $82 a barrel this morning," said analysts at Commerzbank AG in a note to clients.
The Paris-based IEA on Friday revised up by 70,000 barrels a day its oil demand forecast for both 2009 and 2010, saying that higher-than-expected non-OECD data largely offset persistently weak OECD readings.
Global oil demand is expected to rise by 1.6 million barrels a day, or 1.8% year-on-year, to 86.6 million barrels a day in 2010, the IEA said in its monthly report.
In contrast, demand is estimated to have contracted by 1.2 million barrels a day, or 1.4% year-on-year, to 85.0 million barrels a day in 2009.
After five consecutive quarters of decline, global oil demand began growing again on a yearly basis in the fourth quarter of 2009, the IEA said. However, this year's demand growth will be fuelled entirely by emerging countries, particularly those in Asia.
"The uneven distribution of oil demand represents a risk factor for the oil price, since, in the long run, emerging economies will be unable to maintain the current high demand dynamics," said the Commerzbank analysts.
The forecast for demand in the OECD, or the developed economies, was actually revised lower by 120,000 barrels a day for 2010, given very weak readings in January, most notably in Europe, the IEA said.
In contrast, China's apparent demand surged 28% year-on-year in January. The Asian nation is expected to account for almost a third of global oil demand growth in 2010.
"Chinese officials have made it clear that the government will continue to foster strong economic growth as long as inflation remains moderate, thus raising the possibility of potential upside sensitivity for the country's oil demand outlook," the IEA said.
In recent days, the Organization of Petroleum Exporting Countries and the U.S. Energy Information Administration have also raised their forecasts for global oil consumption this year.
Also boosting oil prices on Friday was weakness in the U.S. dollar. The dollar index (DXY 79.94, -0.38, -0.47%) , which tracks the performance of the greenback against a trade-weighted basket of currencies, dropped 0.3% to 79.95.
