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LONDON (Reuters) – Global oil demand will grow by more than previously expected in 2010, the International Energy Agency (IEA) said on Thursday, with all the growth coming from emerging markets.
The industrialized world is going through an “oil-less” recovery, the IEA said, with signs demand has peaked in developed countries despite many returning to economic growth.
The Paris-based adviser to 28 industrialized economies revised upwards its demand growth estimate for 2010 by 120,000 barrels per day (bpd) to 1.6 million bpd.
The strong rebound in demand follows two years of falling consumption as the world struggled with the deepest financial crisis since the 1930s. The IEA estimated oil demand would now average 86.50 million bpd this year, just 10,000 bpd below the all-time peak seen in 2007.
“The demand growth is all coming from countries east of Suez,” David Fyfe, head of the oil industry and markets division of the IEA told Reuters Insider TV.
“The emerging economies of China, India, the rest of Asia and the Middle East is where all the action is.”
Fyfe said while demand for motor fuels and petrochemicals may rise slightly in industrial countries, there has been a huge shift away from using oil for power and heating generation.
The IEA sees oil demand growing more in 2010 than either the U.S. Department of Energy or the Organization of the Petroleum Exporting Countries. Both projected 2010 oil demand just above 85 million bpd earlier this week.
The IEA said its view on demand growth was linked to the International Monetary Fund’s stronger outlook for the global economy, which is now seen growing 3.8 percent in 2010 from an earlier estimate of 3.1 percent.
Emerging market growth is expected to average 6.1 percent.
Fyfe said oil demand in booming emerging market oil consumption had been boosted by price subsidies and government economic support during the financial crisis, despite the relatively high cost of crude.
“There’s a disconnect still between end user prices and international prices,” Fyfe told Reuters by telephone.
The IEA expects oil prices to average $75 a barrel in 2010, up from $58 a barrel last year. U.S. crude prices were trading at $74.80 a barrel at 1350 GMT on Thursday, up 28 cents.
The large rebound in demand has seen the IEA raise its forecast for how much oil is needed from the Organization of the Petroleum Exporting Countries (OPEC) to balance the market. The IEA upped its forecast by 300,000 bpd from last month’s report.
The oil needed from OPEC would total 29.4 million bpd in 2010, up from 28.9 million bpd last year, the IEA said.
Output from OPEC countries rose by 105,000 bpd to 29.1 million bpd in January, the IEA said, adding that the 11 OPEC members with production targets were producing about 1.8 million bpd above the group’s target of 24.845 million bpd.
The IEA revised its production estimate for countries not in OPEC up by 100,000 bpd from last month’s report. Non-OPEC supply was expected to average 51.6 million bpd in 2010, 200,000 bpd higher than last year.
Oil stocks in countries of the Organization for Economic Cooperation and Development (OECD) have fallen. The IEA said inventories were the equivalent of 58.1 days of forward cover at the end of December, just 0.1 day higher than a year earlier.
The agency said stocks likely rose in January but it believed the amount of crude and oil products in floating storage fell at the start of this month.
(Reporting by David Sheppard in London; Editing by Alex Lawler, Jo Winterbottom and William Hardy)