LONDON: Two of the world’s most influential oil forecasters gave contrasting outlooks for 2011 on Friday, with the consumer’s watchdog anticipating robust demand and producer group OPEC saying supply was adequate.
The International Energy Agency, an adviser to 28 industrialized countries, in a monthly report lifted its 2011 global oil demand growth forecast by 130,000 barrels per day (bpd) to 1.32 million bpd and raised its projections to 2015.
But the Organization of the Petroleum Exporting Countries, which meets to set output policy on Saturday, in its monthly report left its 2011 demand growth forecast virtually unchanged.
Oil prices this week hit $90 a barrel for the first time in more than two years driven by rising demand, the IEA said. Even so, OPEC is not expected to change its official output targets at Saturday’s meeting.
"Against a backdrop of much stronger-than-expected global oil demand growth and oil prices above two-year highs, OPEC may come under pressure to increase supplies to the market in the new year," the IEA said in its report.
While the IEA forecast OPEC would need to pump 29.5 million bpd next year — up 100,000 bpd from its previous forecast — OPEC left its estimate steady at 29.24 million bpd and cited more than adequate supplies.
"Given the existing level of excess inventories, ample crude oil spare production capacity and idle refinery capacity, the market is expected to have a robust cushion against any sudden surge in demand or disruption in supply," said OPEC’s report.
Oil prices have recovered from a slump towards $30 at the end of 2008 when OPEC agreed a record supply cut. OPEC officials have said speculation, rather than tightening supplies or rising demand, in part explain the rally.
OPEC’s Secretary General Abdullah al-Badri on Thursday said the group wanted a more balanced market before it would increase supplies, even if prices go to $100.
Diverging Views
The three main oil forecasters — OPEC, the IEA and the US government’s Energy Information Administration, have repeatedly adjusted demand predictions this year as they struggled to interpret mixed evidence of economic recovery.
Friday’s IEA report said oil’s strength probably derived from a surge in consumption in the third quarter of 2010 when demand grew by 3.3 million bpd, showing a convincing recovery from global economic recession.
In 2009, oil consumption shrank by 1.15 million bpd.
The IEA said the demand surge in the third quarter was largely driven by industrialized countries, which almost matched expansion in China and other nations outside the Organization for Economic Cooperation and Development (OECD).
For the whole of 2010, the IEA expects global demand growth to average 2.47 million bpd. Annual growth reached a peak of 3 million bpd in 2004 led by rapidly rising Chinese consumption, according to IEA figures.
OPEC forecast world oil demand in 2011 would rise by a slower rate of 1.18 million bpd, a marginal 10,000 bpd increase from last month’s report.
More needed from OPEC?
The 12-member group pumped 29.24 million bpd in November, the IEA estimated, higher than the 29.07 million bpd estimated by a Reuters survey and the 29.20 million bpd estimated by OPEC based on secondary sources.
The updated outlooks leave the US government’s Energy Information Administration as the most bullish on demand next year of the three main forecasters.
The EIA on Tuesday said it expected consumption to rise by 1.43 million bpd next year.
In an update of its medium-term projections, the IEA said 2009-2015 world oil demand would grow by an average of 1.4 million bpd each year, higher than its previous forecast made in June.
While it also increased supply projections, the IEA said rising consumption would boost demand for OPEC crude to 32.35 million bpd in 2015.
Additional reporting by Christopher Johnson
