Two of the world's most influential oil forecasters gave sharply different outlooks for 2011 on Friday, as the consumer's watchdog anticipated robust demand and producer group Opec said supply was plentiful. The Organisation's of the Petroleum Exporting Countries' relatively bearish outlook makes the case for no change in Opec supply policy when the group meets on Saturday in Quito.
It forecast 2011 global oil demand growth would increase to 1.18 million barrels per day, only 10,000 bpd more than predicted in last month's report. In its monthly update, the International Energy Agency, an adviser to 28 industrialised countries, lifted its 2011 global oil demand growth forecast by 130,000 bpd to 1.32 million bpd and also raised its projections to 2015.
Oil prices this week hit $90 a barrel for the first time in more than two years driven, the IEA said, by rising demand. "Against a backdrop of much stronger-than-expected global oil demand growth and oil prices above two-year highs, Opec may come under pressure to increase supplies to the market in the new year," the IEA said in its report. Opec has yet to be convinced fundamental strength rather than speculation is at the root of price strength.
Its Secretary General Abdullah al-Badri on Thursday said the group wanted a more balanced market before it would increase supplies, even if prices reached $100. While the IEA forecast Opec would need to pump 29.5 million bpd next year - up 100,000 bpd from its previous forecast - Opec left its estimate steady at 29.24 million bpd and cited more than adequate supplies. "Given the existing level of excess inventories, ample crude oil spare production capacity and idle refinery capacity, the market is expected to have a robust cushion against any sudden surge in demand or disruption in supply," said Opec's report.
The three main oil forecasters - Opec, the IEA and the US government's Energy Information Administration, have repeatedly adjusted demand predictions this year as they struggled to interpret mixed evidence of economic recovery. Friday's IEA report said oil's strength probably derived from a surge in consumption in the third quarter of 2010 when demand grew by 3.3 million bpd, showing a convincing recovery from global economic recession.
In 2009 as a whole, oil consumption shrank by 1.15 million bpd. The IEA said the demand surge in the third quarter was largely driven by industrialised countries, which almost matched expansion in China and other nations outside the Organisation for Economic Co-operation and Development (OECD). For the full year 2010, the IEA expects global demand growth to average 2.47 million bpd. Annual growth reached a peak of 3 million bpd in 2004, led by rapidly rising Chinese consumption, according to IEA figures.
The updated outlooks leave the US government's Energy Information Administration as the most bullish on demand next year of the three main forecasters. The EIA on Tuesday said it expected consumption to rise by 1.43 million bpd next year. In an update of its medium-term projections, also issued on Friday, the IEA said 2009-2015 world oil demand would grow by an average of 1.4 million bpd each year, higher than its previous forecast made in June.