Last Updated: Wed Mar 14, 2012 12:17 pm (KSA) 09:17 am (GMT)

IEA maintains oil demand forecast, citing high prices

In absolute terms, global demand for oil was forecast at 89.9 mbd, The International Energy Agency report said. (File photo)
In absolute terms, global demand for oil was forecast at 89.9 mbd, The International Energy Agency report said. (File photo)

The IEA maintained Wednesday a forecast for moderate oil demand growth this year, saying that subdued economic activity and high prices would restrain upward pressure on consumption.

The International Energy Agency kept its forecast for growth in oil demand this year unchanged at 0.8 million barrels per day (mbd) in its first report since Greece secured a second rescue deal from public and private creditors.

In absolute terms, global demand for oil was forecast at 89.9 mbd, the report said.

The IEA underscored “a heady brew of both real and anticipated supply-side risks, alongside a very evident tightening in actual market fundamentals that has been underway since mid-2010.”

While noting the international economic sanctions taken against Iran, the IEA said that “more prosaic ongoing tightening in the supply/demand balance” had helped to raise prices by 20 percent since December.”

Factors that curbed oil supplies included unexpected cuts in the North Sea and Canada, along with “geopolitical disputes in Africa and the Middle East.”

After trimming its forecast for oil demand growth last month, the agency's latest report said: “It seems appropriate to stand back and acknowledge a big picture that, arguably, explains more of the price strength seen in recent months than does ‘speculation' about real and perceived geopolitical risks.”

The report was released days after eurozone finance ministers signed off on more aid for Greece, its second bail-out following a rescue package worth 110 billion euros ($144 billion) in May 2010.

In Asia, oil prices were mixed in afternoon trading as upbeat economic data and Middle East tensions supported markets while investors took profits from recent gains, analysts said.

New York’s main contract, light sweet crude for delivery in April was up a cent to $106.72 while Brent North Sea crude for April delivery shed nine cents to $126.13.

“The market still remains quite bullish overall, supported by optimism about the world economy,” said Justin Harper, market strategist at IG Markets Singapore.

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