Oil demand could recover to pre-crisis 2007 levels in 2010 - IEA

23 June 2010 12:32  [Source: ICIS news]

LONDON (ICIS news)--Global oil demand could recover to pre-crisis 2007 levels before the end of this year, based on the International Monetary Fund's (IMF’s) latest forecast of a near 4.5% annual increase in global GDP from 2010 onwards, the International Energy Agency (IEA) said on Wednesday.

This means that spare crude capacity could start declining as soon as next year to reach 3.6m bbl/day by 2015, leading to a tightening global balance and more jittery markets after what has been a period of relative price stability over the past year, the IEA said.

Based on the most recent IMF forecast, the IEA predicted an annual increase in oil demand of 1.4% - or an average of 1.2m bbl/day - to reach nearly 92 bbl/day by 2015.

In this scenario, surplus capacity would fall to below 5% of global demand by 2014 despite new OPEC capacity coming on stream, the IEA said.

However, "the projected growth in demand is not set in stone", said Nobuo Tanaka, executive director of the IEA.

In a lower growth scenario, where GDP increases by only 3% per year, crude demand growth will average at around 1% - or 840,000 bbl/day - taking global demand to 90m bbl/day by 2015, the IEA said.

This would also effectively prolong the period of "more comfortable" markets, the agency said.

Almost all growth in oil demand would come from non-OECD (Organisation for Economic Co-operation and Development) countries, with demand from the transport sector playing a crucial role, it added.

"Oil and gas markets are starting to show signs of recovery, but the impact of the recession differs across regions, and the outlook remains very uncertain,” said Tanaka at the launch of a new combined IEA publication, Medium Term Oil and Gas Markets 2010.

“In both oil and gas, there is a notable dichotomy between non-OECD and OECD markets, with strong growth in China, India and the Middle East compared to weaker or flat demand elsewhere, especially in the fragile European economy,” Tanaka added.

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By: Elaine Mills
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