Global demand for oil is back on the rise, although the shift may reflect only a slowing decline rather than actual economic recovery, the International Energy Agency said yesterday.
The group has revised its forecasts for worldwide demand for this year up by 120,000 barrels per day (bpd), following stronger than expected thirst for oil in the first three months of the year. Global oil demand is now expected to hit 83.3 million bpd, still some 2.9 per cent – or 2.5 million bpd – lower than 2008 but higher than previous predictions of the sharpest fall since 1981.
"These adjustments do not necessarily reflect the beginning of a global economic recovery, signalling at best what could be the bottoming out of the recession," the IEA says.
The biggest rise in oil demand is from developed economies in the OECD, according to the IEA. But it is too soon to be sure of economic recovery. The higher demand is largely for petrochemical feedstocks, which dropped to unprecedented lows early this year as companies ran down their inventories. Demand for transportation fuel remains weak, suggesting other economic sectors are still constrained, so the burst of activity may be due to re-stocking only.
The oil price has risen steadily since its low point in December, breaking through the psychological $70 mark earlier this week. As with last year's bubble, commentators blame speculators. But the IEA is less certain. "The latest surge in crude oil markets was partly fuelled by signs of slightly stronger fundamental factors," yesterday's report says. "Increased demand for crude by refiners, the onset of the summer gasoline season and a substantial drawdown in floating oil stocks helped boost prices."