The recovery in the global economy will drive a sharper rebound in oil consumption next year, according to the International Energy Agency, which also upgraded its medium-term demand projections on Friday.
The energy watchdog of the west held its 2009 estimate for global oil demand virtually unchanged at 84.9m barrels a day but revised up its 2010 consumption forecast by 130,000 b/d to 86.3m b/d.
SGX to launch commodity products contracts - Dec-03
CBOE on course to demutualise - Dec-01
By 2014, the IEA expects global oil demand to have increased close to 91m b/d, averaging growth of 1.2 per cent annually over the next five years.
All of the demand growth will be generated by non-OECD countries which will account for 51 per cent of global consumption by 2014.
“Much (of the) dust still has to settle in the aftermath of the 2008 economic meltdown, but our working assumption remains that a degree of structural demand destruction has occurred, notably in the OECD, which may constrain overall levels of demand growth in future,” the IEA said.
The IEA cautioned that the key risk to its forecast for a stronger rebound in 2010 remained the outlook for the US where demand remained “stubbornly sluggish”.
US demand is expected to rise just 0.7 per cent to 18.86m b/d in 2010, making only a partial recovery after dropping by 4 per cent this year.
The weakness in US consumption prospects stands in marked contrast to developments in China where total oil demand is forecast to rise 3.6 per cent to 8.7m b/d next year after an increase of 6.6 per cent this year.
The IEA cautioned that demand projections for China could well be revised as the severe snowstorms and the accompanying cold snap that hit northern and north western China in early November had forced road closures and disrupted deliveries of coal, oil products and natural gas.
The IEA pointed out that Chinese demand this year was the highest growth of any country during a recession, boosted in part by the government’s stimulus programme.
The IEA also noted hat there was a “mismatch” between China’s subdued petrol consumption growth and the surge in car sales.
“It remains unclear whether Chinese drivers are highly circumspect with regards to car usage, whether the vehicle fleet has suddenly become extremely efficient or whether gasoline demand is simply being under reported” said the IEA.
On Friday, US crude oil prices remained under pressure compared with Brent, the European benchmark.
After dipping below the $70 a barrel mark in the previous session, Nymex January West Texas Intermediate rose 31 cents to at $70.85.
ICE January Brent added 40 cents at $72.26 a barrel.
Lawrence Eagles, commodity strategist at JP Morgan said world oil prices were likely to remain under pressure until the end of the first quarter of 2010 due to weak demand from refiners who would reduce their inventories.
But Mr Eagles said inventories would be falling rapidly by the second half of 2010, driving prices higher into 2011 by which time the “moderates” in Opec (such as Saudi Arabia) would find it increasingly difficult to control price gains.
JP Morgan is forecasting that WTI will average $68.75 a barrel next year as improvements in vehicle efficiencies in the US and other developed countries should temper rapid demand growth the emerging nations.
