The International Energy Agency (IEA) has said today that economic recovery is pushing up estimates of oil demand this year and 2011t. But the watchdog for 28 industrialised countries including Ireland,  warned of dangers to growth in advanced and some emerging countries.

The IEA said there was a 'significant' risk to the latest upgraded forecast for oil demand, which means that the new estimate of demand in advanced countries points to a slight net fall in 2011. It raised its estimate for demand for oil around the world this year by 80,000 barrels per day, and for next year by 50,000 barrels per day. This was on the basis that the global economy would grow by 4.5% this year and 4.3% in 2011.

The IEA forecast that total demand for oil this year would rise by 1.8m barrels per day from last year (2.2%) to 86.6m.

Highlights of the latest Oil Market Report
dated: 11 August 2010

Crude oil futures trended higher in July on stronger financial markets and supply outages in the US Gulf of Mexico and the North Sea. By early August, prices rose to their highest level in three months before retreating on more comfortable supplies and concerns over the global economic recovery. WTI and Brent currently stand near $80/bbl.

Global oil demand for 2010 and 2011 is revised higher on stronger GDP assumptions and baseline adjustments. Demand is seen at 86.6 mb/d in 2010 (+2.2% or +1.8 mb/d year-on-year) and 87.9 mb/d in 2011 (+1.5% or +1.3 mb/d). Weaker economic recovery, a third lower than the base case, would cut the 2010 and 2011 prognoses by 290 kb/d and 1.2 mb/d, respectively.

Global oil supply rose 850 kb/d to 87.2 mb/d in July, as Norwegian maintenance ended and OPEC boosted supplies. Non-OPEC supply estimates for 2010 are hiked to 52.6 mb/d, rising to 52.9 mb/d in 2011. BP has plugged its leaking well in the Gulf of Mexico, but we now identify 60 kb/d of potential lost output due to regional project delays in 2010, rising to 100 kb/d in 2011.

OPEC crude oil supplies edged up 220 kb/d to 29.2 mb/d in July, on higher output from Nigeria and the UAE. The ‘call on OPEC crude and stock change’ is reduced by 100 kb/d for both this year and 2011, to 28.8 mb/d and 29.1 mb/d, respectively. OPEC NGLs are forecast to rise by 600 kb/d to 5.9 mb/d in 2011, similar growth to 2010.

Global refinery crude throughputs are revised up 425 kb/d for 2Q10 on strong European runs. At 73.9 mb/d, 2Q10 global runs are 1.8 mb/d higher year-on-year, with growth underpinned by expansions in China and a recovery in US refinery activity. Forecast 3Q10 runs are hiked to 74.7 mb/d, 1.1 mb/d above 3Q09.

OECD industry stocks fell by 0.8 mb in June to 2 760 mb, or 61.0 days of forward demand cover. Preliminary data point to a seasonal 21.5 mb build in the OECD in July, driven by product increases in the US, while crude and products held in short-term floating storage fell.