IEA lifts oil demand forecasts on US, Asian growth

[December 10, 2010]  PARIS (AP) -- The International Energy Agency on Friday raised its forecast for global oil demand for 2010 and 2011, citing stronger-than-expected consumption in North America and emerging Asian countries, especially China

The Paris-based agency noted that under such conditions OPEC could come under pressure next year to boost supply.

Global demand next year should hit 88.8 million barrels a day, 260,000 daily barrels more than previously expected, the agency said. The IEA also raised its 2010 estimate to 87.4 million barrels a day, up 130,000 daily barrels from its previous forecast.

Oil has hovered in the upper-$80s this week -- reaching a two-year high of $90.76 on Tuesday -- as traders have gauged how much global crude demand may grow in 2011.

Officials of the 12-nation Organization of Petroleum Exporting Countries are likely to leave the group's production quotas unchanged at Saturday's meeting in Ecuador, the IEA said in its latest monthly report.

"Pre-meeting statements by OPEC ministers suggest the group is planning on a quick agreement to roll over existing output targets," said the report from the agency, which is the energy arm of the Organization for Economic Cooperation and Development, a grouping of the world's richest nations.

But "against a backdrop of much stronger-than-expected global oil demand growth, however, OPEC may come under pressure to increase supplies to the market in the new year if prices continue their relentless rise," the report said.

The agency said that because of the higher-than-expected global demand next year, OPEC will likely need to produce an estimated 29.5 million barrels a day -- 100,000 daily barrels more than the IEA's previous estimate.

Preliminary data from China suggests that demand was up by 12.6 percent in October 2010 compared with a year earlier, the IEA said.

"The strength of China's oil demand is consistent with other indicators suggesting that the economy is in danger of overheating," the report said. "Not only does GDP growth continue to hover around the 10 percent mark, but inflation is also creeping up."

[Associated Press]

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