OIL Demand Increases as Europe Recovers From the Recession

A new update of forecasts for global oil demand was released by the International Energy Agency (IEA) as a result of the rapid growth of emerging economies and improved economic conditions in Europe.
IEA warned however, that the prospects for the global economy remain “highly uncertain” and thus the possibility of sudden pressures on the demand can not be excluded. According to the IEA – which has an advisory role to 28 industrialize developed economies – global oil demand will be increased this year by 1.8 million bpd/day or 2.2%, boosting the demand to 86.6 million barrels per day – about 80,000 barrels higher than the assessment in July. IEA also believes that the increased demand will continue to grow next year, by a slightly slower pace (1.5 %), reaching 87.9 million barrels per day.
Analysts of the international service estimate that the consumption in developed OECD economies will be increased by 0.2% this year, compared to earlier estimations of a slight drop. As they noted, the revision is due, primarily to the promising estimations for Europe and for US but on lesser extent.

For the countries outside the OECD, the demand is projected to grow by 4.5% this year followed by a further increase of 3.7% in 2011. Nevertheless, the IEA remains extremely cautious. “The recovery in demand could be lost in 2011, if the growth of the global economy is quite slower than currently estimated”, said the head officer of the Oil Industry and Markets of the IEA department, Mr. David Faif.
Regarding to oil supply, the international agency estimates that the countries outside OPEC will increase their production by 200,000 bpd/day in 2010 reaching the 52.6 million barrels per day.
On the inflation front yesterday, prices fell below $79 because of growing concerns about the fragile recovery of the U.S. economy, and the turn of China into a more restrictive policy.