London: Global oil demand will be almost 0.5 million barrels per day (bpd) higher than previously forecast this year and next on stronger-than-expected fuel use in North America and Asia, the International Energy Agency said.
The IEA, adviser to 28 industrialised economies, said on Thursday that world oil consumption would average 84.4 million bpd in 2009 - down 2.2% from last year due to the economic downturn.
But it said in its monthly Oil Market Report that demand will rally next year, rising 1.3 million bpd, or more than 1.5%, as recovery takes hold.
David Fyfe, head of the IEA’s oil industry and market division, said oil consumption would pick up again towards the end of this year after a period of extreme weakness, especially in the large, developed economies.
“The year-on-year decline will diminish as we go through the end of 2009, and then from early 2010, we will begin to see year-on-year growth in global demand,” Fyfe said.
The Organization of the Petroleum Exporting Countries (Opec) met in Vienna on Wednesday and agreed to keep its oil production unchanged, with the 11 Opec members subject to curbs aiming to maintain output at 4.2 million bpd below their September 2008 production levels.
Opec oil output has increased this year despite promises to restrain production and the IEA said the group pumped 55,000 bpd more in August than in July, taking Opec-11 compliance with promised cuts down to 66% from 68% in July.
The IEA estimated total Opec supply at 28.81 million bpd in August. It kept its estimates of non-Opec oil supply unchanged at 51 million bpd for 2009 and at 51.5 million bpd for 2010.
Oil prices have rallied strongly this year with investors focusing more on the prospect of economic recovery and rising stock markets than on the immediate supply and demand fundamentals of the oil market, analysts say.
Benchmark US light crude oil futures were up 90 cents per barrel at $72.21 by 0900 GMT on Thursday, more than double the 2009 low of $32.70 reached in January.
The IEA said oil inventories in the big developed countries of the OECD remained unchanged at the equivalent of 61.8 days of forward cover at the end of July, 4.6% higher than their level a year ago.
Fyfe said this level of stock cover was unusually high but had to be seen in the context of the deep economic downturn.
“It is a slightly misleading measure when you are in such an exceptional global economic recession situation.”
The IEA said the supply of middle distillates such as heating oil and diesel was high and future oil price direction would hinge partly on how long this persisted.
“Middle distillates in particular are the main point of concern for the winter. There is quite frankly an overhang of middle distillate, which partly brings into question the durability of the industrial turnaround,” he said, adding use of these products correlated fairly closely with economic activity.
“That says to us that certainly in the OECD countries, economic turnaround is muted at best.”