London: The International Energy Agency (IEA) raised its forecast for global oil demand this year as developing countries need more crude to fuel their economies.
IEA increased its estimate for world demand in 2010 by 170,000 barrels per day (bpd) to 86.5 million barrels per day (mbpd). That would mean a gain of 1.6 mbpd, or 1.8%, from 2009 levels, it said. Consumption growth is driven entirely by economies outside the Organisation for Economic Cooperation and Development (OECD), IEA said.
Global oil demand now takes its cue primarily from rising emerging country incomes, the Paris-based agency said it its monthly oil market report on Thursday. More robust economic projections by the International Monetary Fund (IMF), notably for 2010, are partly counterbalanced by a higher price assumption and persistently weak OECD oil demand data.
IMF forecasts world economic growth of 3.8% this year, up 0.8 percentage point from its previous estimate. While the estimates for both OECD and non-OECD economies were revised up, it is emerging and developing economies that are the key driving force in the economic recovery and rebound in oil demand, the IEA said.
Oil consumption in those countries, where economic growth is forecast at 6.1%, is expected to average 41 mbpd in 2010, up 1.6 mbpd, or 4%, from last year, according to the IEA. That is 170,000 bpd more than the agency estimated last month.
Asian economies, in particular China, will lead the increase, IEA said. Chinese oil demand is forecast to surge 4.7% this year to 8.9 mbpd. The outlook assumes that steps by the Chinese government to curb inflationary pressures won’t curb economic growth, forecast by IMF at 10% this year.
IEA left its estimate for oil consumption in OECD countries unchanged from last month at 45.5 mbpd in 2010, the same level as last year, even as IMF raised its economic growth forecast for the region.
Demand in those countries may have peaked, according to IEA, as they shift away from heavier oil products such as heating oil and fuel oil to cleaner, more efficient energy sources such as natural gas, renewables and nuclear power.
Oil averaged about $62.67 (Rs2,914) a barrel in 2009, and is at $75.68 a barrel so far this year, according to Bloomberg data. The effect of these higher prices on oil consumption partly offsets stronger economic growth, the agency said.
The stronger outlook means there will be a greater burden on the Organization of Petroleum Exporting Countries (Opec) this year to balance global demand and supply, IEA said. The agency raised its call on Opec crude by 300,000 bpd this month to 29.4 mbpd.