Global oil demand and prices will rise in 2010, driven higher by robust growth in emerging economies, the Paris-based International Energy Agency said today, raising its demand and prices forecasts. The energy watchdog of the advanced countries including Ireland, forecasts 2010 demand to rise to 86.5 million barrels a day in 2010 compared to a forecast last month of 86.3, while average prices will rise to $75 a barrel from $58 in 2009. Global daily demand is now estimated at 84.9 million barrels per day (mbd) in 2009. The IEA is forecasting a 1.6 million barrel per day increase. Demand growth is expected to come entirely from outside the Organisation for Economic Cooperation and Development (OECD), a grouping of 31 mainly developed economies including the UK, France, Germany, Japan, Ireland and the US.
"'Even the recent record US and European winter snows look unlikely to revive OECD demand - -which remains flat at best in 2010," the watchdog said in its monthly oil market report.
The IEA said slow growth in advanced economies such as in European and North American markets, was also because of a move away from oil to gas, renewable energies and nuclear power for heating, power and industrial processes. "The one area that drove OECD oil demand growth in recent years - North America - has virtually stalled as a result of the sharp economic recession, cheaper energy alternatives and behavioural changes," it said. By contrast, the world's major emerging economies, in particular Asian giants China and India, are expected to consume more and more oil as they return to strong growth and look to ramp up manufacturing.
Demand for oil in non-OECD countries is expected to rise by 4%. February's revised report was in line with higher economic growth forecasts from the International Monetary Fund, it said.
The IMF now projects growth of 3.9% in 2010, following a 0.8% contraction in 2009.
Highlights of Oil Market Report:
Benchmark crude oil prices fell to six-week lowsby early February, after warmer weather in the Northern Hemisphere, negative macroeconomic news and sudden strength in the dollar set in motion a $12/bbl slide. Prices regained some of their losses in recent days, with WTI (US benchmark) last trading at $73.80/bbl and Brent at $72/bbl.
Forecast global oil demand is revised up170 kb/d for 2010 as more robust IMF GDP projections are partly offset by a higher price assumption and persistently weak OECD oil demand. Global oil demand is estimated at 84.9 mb/d in 2009 (-1.5% or -1.3 mb/d year-on-year) and 86.5 mb/d in 2010 (+1.8% or +1.6 mb/d versus 2009), with growth entirely in non-OECD countries.
Global oil supply fell 45 kb/d to 85.8 mb/d in January, with higher total OPEC output (mostly NGLs) offset by lower non-OPEC production. Average 2009 non-OPEC production is revised 70 kb/d higher at 51.4 mb/d while 2010 supply is revised up by 120 kb/d to 51.6 mb/d on slightly improved US and North Sea crude prospects.
OPEC crude output was up 105 kb/dat 29.1 mb/d in January. OPEC NGL production is forecast to rise 0.8 mb/d to 5.5 mb/d in 2010, with just over half of the increase related to ramp-up from 2009 project start-ups. The call on OPEC crude and stock change for 2010 is revised up 300 kb/d to 29.4 mb/d.
OECD industry stocks fell 67.8 mb in Decemberto 2 678 mb, around 0.8% below 2008’s level, on lower crude and middle distillate inventories. End-December forward demand cover fell to 58.1 days, now only 0.1 day higher than a year ago. Preliminary data point to a January OECD stockbuild of 11.4 mb, but with lower floating storage.
Global 4Q09 and 1Q10 refinery crude throughput forecastsremain unchanged at 72.3 mb/d and 72.6 mb/d respectively, though in the latter’s case, higher Canadian, Mexican and OECD Pacific runs offset lower non-OECD throughputs. Despite some signs of improvement for the refining industry, the sector’s short-term outlook remains fundamentally bearish.
