Rapid global economic expansion is fueling the biggest increase in world oil demand growth for 16 years, the International Energy Agency (IEA) said today.
In its monthly Oil Market Report the Paris-based agency raised its forecast for incremental oil demand in 2004 by 270,000 barrels a day to 1.95 million barrels per day (bpd) on the 80.6 million bpd world market.
Stronger-than-expected energy consumption among industrialised nations is bolstering explosive demand growth in China. The agency, adviser on energy to 26 industrialised nations, said its world growth forecast represents the largest absolute increase in global oil demand since 1988.
The report comes with US oil prices setting a fresh 13-year high of $40.38 a barrel today, despite proposals from leading OPEC producers for higher output limits.
The price spike has come during the second quarter, when world oil demand is at its lowest seasonal ebb, raising concerns about prices later in the year, as demand rises again.
The IEA is forecasting world oil consumption will rise 3.8 million bpd from the second quarter's 78.7 million bpd to 82.5 million in the fourth quarter.
Much of the extra fourth quarter demand will need to come from inventories so traders are trying go calculate whether stocks are being built sufficiently during the second quarter to meet that demand.
In China second quarter consumption is expected up 20.9 per cent on an annual basis, or 1.08 million bpd, to 6.26 million bpd, after growth of 18.5 percent in the first quarter, the IEA said.
The IEA said non-OPEC producers, other than Russia, are failing to pump as much as expected this year. The net result is an increased reliance on OPEC for extra crude.