Saturday, 13 March 2010

Astonishing growth in Chinese oil demand: IEA

China is experiencing “astonishing” growth in oil demand this year to match its economic rise while consumption in developed economies is falling, the International Energy Agency said on Friday.

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Guanyu 道 said...

Astonishing growth in Chinese oil demand: IEA

AFP
12 March 2010

China is experiencing “astonishing” growth in oil demand this year to match its economic rise while consumption in developed economies is falling, the International Energy Agency said on Friday.

The IEA said demand surged in China in January by 28 percent on a 12-month comparison and raised its forecast for global demand in 2010 to 86.6 million barrels per day (mbd) from its projection last month of 86.5 mbd.

The forecast was 1.8 percent higher than 2009 demand levels.

But the agency said that demand in the area covered by the Organisation for Economic Cooperation and Development (OECD) remained “persistently weak” and would fall by 0.3 percent this year.

The OECD groups 30 developed economies including Britain, France, Germany, Japan and the United States, which account for most of global economic output.

The agency said in its monthly review of energy markets: “This year’s global oil demand growth will be driven entirely by non-OECD countries, with non-OECD Asia alone representing over half of total growth.”

Demand in developing nations will rise by 4.3 percent in 2010, offsetting the 0.3-percent contraction in the OECD, the group’s fifth year of decline in a row, the IEA said.

“The OECD has not only borne the brunt of the demand slump, but will also see no net recovery at all,” it said.

“China is currently expected to account for almost a third of global oil demand growth in 2010,” it said.

European demand for oil products sank by 8.0 percent in January compared to the same month last year owing to sharp drops in heating and fuel oil despite a bitterly cold winter, the IEA said.

The snow blizzards disrupted road travel, thus partly contributing to a fall in fuel demand in January, the IEA said.

But the IEA said another factor is the switch from oil to other sources of energy, including cheaper natural gas.

The IEA also cautioned that China’s January figures, which assumed that refinery runs that month were unchanged from December, may be partly distorted by product stocking.

Crude oil prices rose close to 83 dollars a barrel on Friday after publication of the IEA report, lifted by signs of firming demand as the world economy recovers from recession, analysts said.

“There is a general consensus that the global economy is growing,” said Victor Shum, an analyst with energy consultancy Purvin and Gertz in Singapore.

“Market participants are bullish at this point based on economic recovery optimism and are thinking ahead about the summer driving season raising gasoline demand in the US,” he said.

Addison Armstrong from US consultancy Tradition Energy, said: “Crude and products futures are marginally higher in moderate overnight volume, bolstered by a weaker dollar and after the IEA raised its outlook for oil demand.”

The recovery in global oil demand comes after the worldwide economic crisis caused demand to fall by 1.4 percent in 2009.

The IEA said the latest data confirms that demand returned to growth on a yearly basis in the last three months of 2009 after five consecutive quarters of decline.

“Assuming that the world’s economic recovery is sustained (although many headwinds remain, as noted in last month’s report), demand growth should be robust over the next four quarters,” the energy agency said.

The global oil supply rose by 0.9 mbd to 86.6 mbd in February, with the OPEC cartel of oil producers registering its first yearly growth since October 2008, the IEA said.

Crude production struck a 14-month high of 29.2 mbd in February, and Iraq accounted for half of the 200,000-barrel-per-day increase, the report said.

The IEA noted that markets expect OPEC ministers to maintain current production targets at their next meeting on Wednesday if oil prices remain near 80 dollars per barrel.

OPEC chief Germanico Pinto, Ecuador’s oil minister, indicated on Thursday that he expected no change in oil production quotas at the group’s meeting.

Guanyu 道 said...

OPEC members pump about 40 percent of the world’s crude oil.