The so-called Great Recession hit crude markets hard because with industrial activity slowing down, the need for massive amounts of energy dipped. Now a recovery is emerging, but the oil markets may not recover in sync with the overall markets. Global demand for crude in 2009 ended 0.3% over its 2008 level, but compared to 2007, it was down about 2%, according to Dina Cover, an economist at TD Bank. "With consumption still quite weak, there is plenty of oil to go around," Ms. Cover said. Total global production increased by 1.6% in the fourth quarter, and was 1.3 million barrels per day greater than demand. "In fact, after showing great improvement through most of 2009, the supply-demand balance shot up dramatically during the last two months of the year." Global inventories are at 95 days supply, compared to the five-year average of 86 days. "What's more, OPEC [the Organization of the Petroleum Exporting Countries] spare capacity jumped from 1.5 million barrels per day to 4.4 million barrels per day in 2009, and is expected to continue to increase through 2011 to nearly 6 million barrels per day as new capacity comes online." Put it all together and despite a rebound in demand for oil, the excess supply, coupled with increasing capacity, will keep the lid on crude prices. TD predicts oil to stick around US$80 per barrel in 2010, and climb to U$85 in 2011.

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