The International Energy Agency has revised upwards its estimate of
world oil demand, quashing hopes of an imminent decline in oil prices.
The IEA said in its monthly oil market report that
demand for oil was running at 82.2 million barrels a day, 750,000 more
than previously thought.
Demand growth this year is running at its fastest level in 24 years, the Paris-based organisation said.
Brent crude futures edged up nine cents to $41.37 as traders digested the news.
US light sweet crude futures, which briefly touched a 21-year record of $45.04 on Tuesday, rose 15 cents to $44.67.
Analysts attribute the surge in demand to a surge in
consumption triggered by the US economic recovery and China’s economic
The IEA added that the effective spare capacity of oil
producers’ cartel Opec had narrowed to about 600,000 barrels a day in
July, following recent efforts to keep pace with rising demand.
The IEA, set up thirty years ago to advise oil consuming
nations, said world demand would rise by a further 1.8 million barrels
next year to 84 million barrels a day.
It added that Opec’s production capacity would rise by
400,000 barrels a day this year, and by a further 700,000 barrels a day
“The market is tight, production and infrastructure
capacity is less than desired, and uncertainties continue to weigh on
the market,” the agency said.
On a positive note, the IEA added that it did not expect
Russian supplies to be disrupted, despite widespread concerns over the
future of local oil giant Yukos, responsible for one fifth of the
Worries that Yukos could be forced to suspend production
because of a tax dispute with the government have contributed to the
recent surge in oil prices.
Last week, IEA chief economist Dr Fatih Birol told BBC
News Online that economic growth would slow unless oil prices retreated
from their current highs.