IEA hikes up global oil demand forecast for 2010

Global Oil Demand Forecast

The International Energy Agency (IEA) has revised up its oil demand growth forecast for 2010 saying most demand will come from emerging, non-OECD economies.

The Paris-based intergovernmental organization, and adviser to 28 industrialized economies, said today that it expects consumers globally, led by China, to burn more crude oil this year than previously forecast as the economic recovery gathers pace.

It expects oil demand this year to be 170,000 barrels per day (bpd) higher than previously expected. Demand is estimated at 86.5 million bpd, representing an increase of 1.6 million bdp compared with 2009 levels, the IEA said in its monthly report on Thursday.

Two years of falling consumption

The strong uptick in demand comes after two years of falling consumption as the world struggled with the deepest financial crisis in over sixty years. The IEA estimated oil demand would now average 86.50 million bpd this year, just 10,000 bpd below the all-time peak seen in 2007.

"The demand growth is all coming from countries east of Suez," David Fyfe, head of the oil industry and markets division of the IEA told Reuters.

"The emerging economies of China, India, the rest of Asia and the Middle East is where all the action is," he added.

Some argue the IEA's role as an advisor to wealthy nations means that it has no choice other than to "talk up" the need for oil markets to have plenty of the commodity available, and in the past the IEA's judgement has been called into question.

Extreme pressure to "distort" figures

Just last year UK newspaper the Guardian reported in November that that a whistleblower from within the IEA claims the organization came under extreme pressure from the US to "distort" figures that pointed towards a looming shortage, for fear of triggering panic buying.

So in what what seems to be a move that covers their back should things significantly go against its predictions, the IEA warned that if global economic growth doesn't meet expectations, oil demand could be around 400,000 bpd lower.

"We are aware of the economic uncertainty ... but we think there is significant growth potential in Asia, the Middle East and other [emerging] countries," said Fyfe.

Oil prices rose 25 cents to $74.80 in New York in early trading today. Prices have fluctuated between $70 and $80 a barrel in recent months amid due to consistently conflicting economic signals.

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