Paris (AFP) May 12, 2011
Bulls in the oil market still have room to run around a price of $110 per barrel but growth of global oil demand is set to ease, the IEA said on Thursday, tipping the see-saw price down again.
The new estimates were based on assumptions that growth of the global economy would slow from 4.8 percent last year to 4.3 percent this year.
This was "with the pace of slow-down being greatest for the OECD (Organisation for Economic Cooperation and Development area)."
The International Energy Agency, the energy monitoring and strategy arm of the OECD, said: "Our crude price assumption is near $110."
It said that the International Monetary Fund "and others" did not see this as "so high as to choke off economic recovery... just yet."
Prices of above $100 dollars per barrel had occurred only since February and March and it would take time for the effects to become "entrenched".
But the agency also said: "Persistently high prices at this stage of the economic cycle may ultimately sow the seeds of their own destruction."
It added: "Until then, the market confronts fundamentals that still look likely to tighten in the second half of 2011."
Commenting on sharp falls in the price of oil at the beginning of May "during a broad commodity rout", the IEA said: "A faltering economic recovery, stronger dollar and speculative commodity sell-off were variously cited as underpinning the correction.
"True, renewed concerns about the economic impact of high prices and shaky economic statistics from the US, China and Germany may have contributed to a degree of profit taking.
"But as the dust settles, prices have again begun to creep higher."
The IEA added: "The market bull run may have legs for a while longer."
In London, the price of benchmark West Texas Intermediate (WTI) oil dropped to $96.51 per barrel, recovering to $96.70 but down $1.51 from the closing price on Wednesday. The price of Brent North Sea oil for delivery in June fell by $1.01 to $111.56 a barrel.
VTB Capital commodities analyst Andrey Kryuchenkov told AFP: "The IEA's monthly report added some pressure."
The agency cut its outlook for global oil demand in 2011 by 190,000 barrels per day to 89.2 mbd.
"Forecast global oil product demand growth for 2011 is trimmed on persistent high prices and weaker IMF GDP projections for advanced economies," the IEA said, putting total demand in 2011 at 89.2 million barrels per day.
This was the first cut in estimated demand for 2011 since the IEA produced its first forecast in the middle of last year. Until now it had constantly revised its estimates upwards as recovery from the economic crisis broadened out.
On the basis of its latest downwardly revised estimates, demand will rise from 87.9 million barrels per day in 2010, which marked an increase of 3.3 percent from the level in 2009, to 89.2 mbd this year, showing an increase of 1.5 percent.
The downward revision reflected mainly an easing of demand in North America where high prices were beginning to hit demand, the agency said.
"...persistently high oil prices, despite the correction that occurred in early May, will likely induce moderate year-on-year declines through the remainder of the year," said the IEA, putting the annual drop in demand at 0.8 percent.
It expected a year-on-year drop in petrol consumption during the upcoming US summer driving season "if retail prices remain at current levels."
Growth of China's demand for oil accelerated in March following two months of slowing down, said the IAE, noting that coal shortages may force recourse to diesel generators, increasing fuel demand.
Overall the agency expected China's oil demand to increase by 6.7 percent this year, after growing by 12.5 percent last year
Global production of oil fell by 50,000 barrels per day in April. This reflected a continued downward trend for output by the Organization of Petroleum Exporting Countries. OPEC output was 28.75 mbd in April or 235,000 bd less than in March and 1.3 mbd below the level in January.
The IEA said that output by Libya had been "shattered" by the effects of the "worsening civil war."
Share This Article With Planet Earth
Powering The World in the 21st Century at Energy-Daily.com
Hanoi rebuffs China comments on island vote
Hanoi (AFP) May 12, 2011
Vietnam's parliamentary elections are an internal matter, the government said Thursday after Beijing objected to the ballot being held on disputed islands in the South China Sea. The two countries have a long-standing dispute over sovereignty of the Paracel archipelago and the more southerly Spratlys, both of which are in potentially energy-rich areas and straddle strategic shipping lanes. ... read more
Eon, RWE lose money on volatile market|
Power shortages hit Venezuela again
Direct Air Capture of CO2 with Chemicals
China facing electricity shortages
Gulf states seek high-tech oil boost
Hanoi rebuffs China comments on island vote
China suspends diesel exports amid inflation fears
Human "polar bear" decries shale gas fracking in S.Africa
Evolutionary lessons for wind farm efficiency
Global warming won't harm wind energy production, climate models predict
Study: Warming won't lessen wind energy
Mortenson Construction to Build its 100th Wind Project
House GOP looking at alternative energy
Pairing Quantum Dots with Fullerenes for Nanoscale Photovoltaics
New technique improves artificial photosynthesis
Clear Skies Sign 162KW Contract
Japan starts shutting down Hamaoka nuclear reactor
Japan moves to secure 'too big to fail' TEPCO
EU nuclear safety testing row in meltdown
Japan shuts down Hamaoka nuclear reactor
Counteracting Biofuel Toxicity in Microbes
MIT Study: conventional fossil fuels sometimes 'greener' than biofuels
Joule Secures First of Multiple Sites to Host Solar Fuel Production
DoD Contracts for Advanced Biofuels Can Spur Technology Deployment
Top Chinese scientists honored with naming of minor planets
China sees smooth preparation for launch of unmanned module
China to attempt first space rendezvous
Countdown begins for Chineses space station program
Chemistry curbs spreading of carbon dioxide
US, China must ensure climate success: Clinton
Effects of climate change in the Arctic more extensive than expected
After a three-decade hiatus, sea-level rise may return to the West Coast
|The content herein, unless otherwise known to be public domain, are Copyright 1995-2010 - SpaceDaily. AFP and UPI Wire Stories are copyright Agence France-Presse and United Press International. ESA Portal Reports are copyright European Space Agency. All NASA sourced material is public domain. Additional copyrights may apply in whole or part to other bona fide parties. Advertising does not imply endorsement,agreement or approval of any opinions, statements or information provided by SpaceDaily on any Web page published or hosted by SpaceDaily. Privacy Statement|