Demand for oil will be stronger than expected, forecasts IEA

Estimates of output raised for second month as China and US swallow more crude

Global demand for oil will not fall as far as expected this year, although fears of a double-dip recession still dampen optimism, the International Energy Agency (IEA) said yesterday.

Stronger than anticipated demand in China and the US in recent weeks has left the estimate of how far oil consumption will fall in 2009 at 1.9 million barrels per day (bpd) – some 400,000 bpd lower than last month's forecast, which was itself revised down by 200,000 bpd from the July total.

The world's thirst for oil is now expected to be 84.4 million bpd in 2009 – some 2.2 per cent lower than last year – but it is likely to rise again by 1.3 million bpd to 85.7 million bpd next year, analysts say.

"There is growing evidence that the global economy may be finally stabilising, with industrial destocking coming to an end, coupled with the effects of large scale government intervention," the watchdog added yesterday.

But despite the upwards revisions on the strength of improving economic data, the IEA counselled against placing too much reliance on a smooth recovery. "The spectre of a double dip, W-shaped recession, which would undermine oil demand growth next year, cannot be entirely discounted," it said.

Even in the newly optimistic climate, demand from OECD developed economies is still expected to fall by 4.7 per cent this year, and only grow by a margin of 0.1 per cent in 2010. And although non-OECD oil consumption is now expected to grow by 400,000 bpd this year – a 220,000 bpd upwards revision – lack of clear data about Chinese inventory levels makes for an uncertain prognosis. The massive government stimulus has boosted demand but attempts to account for stock-building may overstate the case, the IEA said.

The more bullish economic data coming out of the US may also prove illusory. Although petrol demand bounced briefly in July – possibly the result of more stay-at-home driving holidays – consumption of diesel has continued to decline at double-digit rates. "There is considerable uncertainty regarding the prospects of a sustained US economic recovery," the IEA added.

There are also supply-side explanations for the falling inventory levels, according to Malcolm Fraser, of the energy consultancy McKinnon and Clarke. "This summer's hurricane season has been relatively light and has not really hit supplies from the Gulf of Mexico," Mr Fraser said. "As a result, the volume of imports has been relatively low."

The new predictions from the IEA came just a day after the cartel of oil producing countries agreed to hold production at current levels. Opec has cut its production target by 4.2 million bpd since last autumn in an effort to put a floor under the oil prices as it plummeted from July 2008's $147 per barrel high to little more than $30 in December. In recent weeks the price has hovered around the $70 mark.

Suggested Topics
PROMOTED VIDEO
News
ebooksAn evocation of the conflict through the eyes of those who lived through it
News
video
Arts and Entertainment
Martin Amis: Taken to task over rash decisions and ill-judged statements
booksThe Zone of Interest just doesn't work, says James Runcie
Life and Style
life – it's not, says Rachel McKinnon
Arts and Entertainment
Eye of the beholder? 'Concrete lasagne' Preston bus station
architectureWhich monstrosities should be nominated for the Dead Prize?
Travel
travelFrom Notting Hill Carnival to Zombeavers at FrightFest
Latest stories from i100
Have you tried new the Independent Digital Edition apps?
Independent Dating
and  

By clicking 'Search' you
are agreeing to our
Terms of Use.

iJobs Job Widget
iJobs Money & Business

Service Desk Analyst- Desktop Support, Helpdesk, ITIL

£20000 - £27000 per annum: Harrington Starr: Service Desk Analyst- (Desktop Su...

Service Desk Engineer-(Support, ITIL, Software Vendor)

£30000 - £35000 per annum: Harrington Starr: Service Desk Engineer-(Support, S...

Service Delivery and Support Manager

£55000 - £75000 per annum + excellent benefits: Harrington Starr: Service Deli...

Corporate Tax Solicitor

Highly Competitive Salary: Austen Lloyd: CITY - HIGHEST QUALITY INTERNATIONAL ...

Day In a Page

Middle East crisis: We know all too much about the cruelty of Isis – but all too little about who they are

We know all too much about the cruelty of Isis – but all too little about who they are

Now Obama has seen the next US reporter to be threatened with beheading, will he blink, asks Robert Fisk
Neanderthals lived alongside humans for centuries, latest study shows

Final resting place of our Neanderthal neighbours revealed

Bones dated to 40,000 years ago show species may have died out in Belgium species co-existed
Scottish independence: The new Scots who hold fate of the UK in their hands

The new Scots who hold fate of the UK in their hands

Scotland’s immigrants are as passionate about the future of their adopted nation as anyone else
Britain's ugliest buildings: Which monstrosities should be nominated for the Dead Prize?

Blight club: Britain's ugliest buildings

Following the architect Cameron Sinclair's introduction of the Dead Prize, an award for ugly buildings, John Rentoul reflects on some of the biggest blots on the UK landscape
eBay's enduring appeal: Online auction site is still the UK's most popular e-commerce retailer

eBay's enduring appeal

The online auction site is still the UK's most popular e-commerce site
Culture Minister Ed Vaizey: ‘lack of ethnic minority and black faces on TV is weird’

'Lack of ethnic minority and black faces on TV is weird'

Culture Minister Ed Vaizey calls for immediate action to address the problem
Artist Olafur Eliasson's latest large-scale works are inspired by the paintings of JMW Turner

Magic circles: Artist Olafur Eliasson

Eliasson's works will go alongside a new exhibition of JMW Turner at Tate Britain. He tells Jay Merrick why the paintings of his hero are ripe for reinvention
Josephine Dickinson: 'A cochlear implant helped me to discover a new world of sound'

Josephine Dickinson: 'How I discovered a new world of sound'

After going deaf as a child, musician and poet Josephine Dickinson made do with a hearing aid for five decades. Then she had a cochlear implant - and everything changed
Greggs Google fail: Was the bakery's response to its logo mishap a stroke of marketing genius?

Greggs gives lesson in crisis management

After a mishap with their logo, high street staple Greggs went viral this week. But, as Simon Usborne discovers, their social media response was anything but half baked
Matthew McConaughey has been singing the praises of bumbags (shame he doesn't know how to wear one)

Matthew McConaughey sings the praises of bumbags

Shame he doesn't know how to wear one. Harriet Walker explains the dos and don'ts of fanny packs
7 best quadcopters and drones

Flying fun: 7 best quadcopters and drones

From state of the art devices with stabilised cameras to mini gadgets that can soar around the home, we take some flying objects for a spin
Joey Barton: ‘I’ve been guilty of getting a bit irate’

Joey Barton: ‘I’ve been guilty of getting a bit irate’

The midfielder returned to the Premier League after two years last weekend. The controversial character had much to discuss after his first game back
Andy Murray: I quit while I’m ahead too often

Andy Murray: I quit while I’m ahead too often

British No 1 knows his consistency as well as his fitness needs working on as he prepares for the US Open after a ‘very, very up and down’ year
Ferguson: In the heartlands of America, a descent into madness

A descent into madness in America's heartlands

David Usborne arrived in Ferguson, Missouri to be greeted by a scene more redolent of Gaza and Afghanistan
BBC’s filming of raid at Sir Cliff’s home ‘may be result of corruption’

BBC faces corruption allegation over its Sir Cliff police raid coverage

Reporter’s relationship with police under scrutiny as DG is summoned by MPs to explain extensive live broadcast of swoop on singer’s home