Oil demand strong as economies pick up
- Source: Global Times
- [04:55 November 13 2009]
- Comments
Global oil demand is heading higher than expected as economic recovery gathers pace, notably in China, but rising prices could derail expansion, the International Energy Agency (IEA) said Thursday.
The latest data suggests "that global (oil) demand is well on track for resumed year-on-year growth in the fourth quarter of 2009, for the first time since the second quarter of 2008," the IEA said.
The agency raised its estimate for global oil demand this year by 210,000 barrels per day, and for next year by 140,000 barrels per day "following stronger-than-expected preliminary data" for North America and ‘buoyant demand' in Asia and the Middle East."
The agency also noted in its monthly review of energy markets that there was a difference of viewpoint within the Organization of Petroleum Exporting Countries (OPEC).
Some "price hawks" spoke of a need to reduce output further because stocks of oil in the market remained high.
However "there seems to be a quasi-consensus among others that an increase in output targets may be in the offing if prices rose significantly."
"Saudi Arabia has unofficially branded $70-75 a barrel as an ideal target price" for OPEC oil, but the market price has risen above this level, said the report.
The IEA observed, "OPEC members, especially in the Gulf, are worried that higher oil prices could threaten the global economic recovery and further strain relations with consuming nations ahead of climate change talks in Copenhagen."
Oil demand in Europe "plummeted by 6.7 percent year-on-year in September," on the basis of initial data.
"The recent price spike, if further extended, risks derailing the recovery," the IEA said, while stressing uncertainty how the underlying forces in the oil market would work out.
This was partly because demand for oil had fallen heavily at the height of the global economic crisis, due to high oil stocks and fears that a withdrawal of stimulus and possible economic overheating in China could set back activity.
The IEA also noted substantial oil smuggling from Iran and raised its estimates for global oil supplies.
AFP
