OPEC today raised its demand forecast for the oil cartel's crude oil this year as China led strong consumption growth in the fourth quarter.
In a monthly report, OPEC's Vienna-based secretariat raised the forecast full-year 2004 demand for its crude oil by 230,000 barrels per day (bpd) to 26.17 million bpd, expecting world demand growth to push to a four-year high.
Oil prices are bubbling near 13-year peaks, driven by rising Chinese demand, low US gasoline inventories and concern that violence in the oil-rich Middle East could disrupt oil supplies.
OPEC raised the forecast second quarter demand on its crude by 100,000 bpd to 24.86 million bpd, and lifted the third quarter 'call' by 110,000 bpd to 25.96 million bpd.
The biggest jump was in the forecast fourth quarter demand which rose by 600,000 bpd to 27.12 million bpd to account for stronger Chinese growth.
Some analysts say that prices are so high in part because OPEC and other forecasting organisations such as the International Energy Agency (IEA) have been underestimating world demand.
"Despite the recent run of revisions, demand may still be being underestimated, non-OPEC supply overestimated and OPEC production overstated," said Barclays Capital in a report.
"The global market is probably considerably tighter than most balances are indicating," it added.
OPEC estimated world oil inventories rose by 1.38 million bpd in the first quarter 2004, following a 710,000 bpd rise in the whole of 2003.