IEA raises oil demand outlook, but warns of growth doubts

Economic recovery is pushing up estimates of oil demand this year and next, but dangers to growth in advanced and some emerging countries are on the prowl, the International Energy Agency (IEA) said on Wednesday.

There is a “significant” risk to the latest upgraded forecast for oil demand, which in any case means that the new estimate of demand in advanced countries points to a slight net fall in 2011, the IEA said.

It raised its estimate for demand for oil around the world this year by 80,000 barrels per day, and for next year by 50,000 barrels per day.

This was on the basis that the global economy would grow by 4.5 percent this year but by 4.3 percent in 2011.

Total demand for oil this year would rise by 1.8 million barrels per day from demand last year or by 2.2 percent to 86.6 mbd. It would then rise by 1.3 mbd or 1.5 percent to 87.9 mbd next year

“However, concerns that the global economic recovery may falter from the second half of 2010 pose a significant downward risk to the forecast.”

The agency also edged up demand for oil in advanced countries in the OECD by 30,000 bd for this year and next.

This would mean an 80,000-bpd or 0.2-percent increase this year to 45.5 mbd, but followed by a 200,000-bpd or 0.4-percent fall next year to 45.3 mbd.

For both global, and OECD demand, if global growth were one-third lower than expected, oil consumption would be curtailed significantly and the fall in OECD countries in 2011 would be “steeper.”

The outlook for oil prices was also therefore “uncertain,” the IEA, the oil strategy and monitoring arm of the 31-member Organisation for Economic Co-operation and Development, said.