Global economic expansion is fuelling the biggest increase in world oil demand for 23 years, the International Energy Agency (IEA) has announced.
In its monthly Oil Market Report published today, the agency raised its projection for incremental oil demand in 2004 by 360,000 barrels a day to 2.3 million bpd, or 2.9 per cent.
That scale of growth is the largest since 1981, taking world oil market consumption in 2004 to 81.1 million bpd.
The IEA said oil demand had proved stronger than expected in North America, Brazil and India, despite high oil prices.
The report helped underpin oil prices that have fallen from record highs in the wake of OPEC's decision to increase supplies.
US light crude rose 14 cents to $37.68 a barrel, having slipped from last week's 21-year high of $42.45 a barrel.
The IEA praised last week's decision by the Organisation of the Petroleum Exporting Countries to raise oil output, saying that economic growth could not be sustained for the long term at high prices.
"While the pace of economic growth remains strong, it has been driven by a number of one-off factors," said the IEA, adviser on energy to 26 industrialised nations. It cited low interest rate policies, tax cuts, major infrastructure projects in China, depleted industrial inventories and expenditures associated with the war on terror.
"In this respect, price effects have been overwhelmed by wealth effects," it said.
China continues to provide the lion's share of world oil demand growth. The IEA said it expects year-on-year Chinese growth of 1.2 million bpd, 23 per cent, in the second quarter for demand of 6.38 million bpd. That is up from annual growth of one million bpd or 19 per cent in the first quarter.
But it is forecasting growth in China will slow to 8.2 per cent in the second half for average growth in 2004 of 790,000 bpd, or 14.3 per cent.
It said China's imports of crude and petroleum products hit a record 3.391 million bpd in April, up 744,000 bpd from March and 1.438 million bpd higher than in April last year.