Oil demand set to rise, IEA says

London: World oil demand will keep rising as the economy expands but the increase in fuel consumption will be lower in 2011 than 2010 and demand could be a lot weaker if global growth slows, the IEA said yesterday.

Highlighting near record industry oil stocks in developed economies, the International Energy Agency said in its monthly oil market report global oil supply was more than sufficient to meet current and expected demand over the next year.

"By any measure we have a very well supplied market," said David Fyfe, head of the IEA's oil industry and markets division.

"There's a significant cushion of oil supply to cope with unforeseen changes and the risks are very much to the downside. If the world economy slows, oil demand could be quite a bit lower," he said.

The IEA, which advises major industrial countries on energy policy, said global oil demand would average around 86.62 million barrels per day (bpd) in 2010, almost a 1.9 million bpd increase year-on-year, which was 40,000 bpd higher than previously estimated.

In 2011, consumption is forecast to rise to 87.89 million bpd, up almost 1.3 million bpd year-on-year. It said demand growth next year would be 50,000 bpd lower than last month's estimate.

The IEA raised its estimate of 2010 demand for crude oil from the OrganiSation of the Petroleum Exporting Countries by around 100,000 bpd to 28.9 million bpd, saying consumption had risen a little in many areas including several developed economies and in the Asia-Pacific region.

But oil stocks were at very high levels. Oil stocks in the developed economies of the Organisation for Economic Cooperation and Development (OECD) had risen to the equivalent of 61.4 days of forward demand by the end of July.