World oil consumption forecast raised by watchdog

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The Independent Online

An energy watchdog lifted its forecast for world oil consumption today but played down fears that prices will top 100 US dollars a barrel.

Global demand is expected to reach 86.9 million barrels a day this year and 88.2 million barrels a day next year, the International Energy Agency (IEA) said, revising up its previous forecast by 300,000 barrels for each year.

Oil prices broke through the 80 US dollars a barrel mark earlier this month, and higher demand could prompt a further increase, which in turn could be passed on to the petrol pump or see business costs climb.

David Fyfe, editor of the IEA oil market report, tried to calm concerns and said there would be "comfortable levels of supply".

He said: "Prices in early October broke through the psychological 80 US dollars a barrel barrier, with many foreseeing more strength to come.

"Choruses of '100 dollars a barrel by next year' are being heard once more. Our own view, however, is that markets could remain comfortably supplied until well into 2011."

The IEA - the energy arm of the Organisation for Economic Co-operation and Development (OECD), a grouping of the world's richest nations - said changes were made after the latest economic forecast from the International Monetary Fund earlier this month.

The agency said stronger-than-expected economic growth in developing countries, outside the OECD, and increased demand for crude oil in the third quarter of the year in countries within the OECD, led to the upward revision.

The IEA expects oil demand to rise by 2.1 million barrels a day year-on-year in 2010, and the growth to slip back 1.2 million barrels a day in 2011.