PARIS (AFP) – The International Energy Agency on Friday revised down its forecast for world oil demand in 2010, saying trade would be “sluggish” in rich nations and growth would come only from emerging economies.
The IEA forecast that demand would be 1.44 million barrels per day (mbd) this year, compared to its 2010 estimate made last month of 1.47 mbd.
The Paris-based agency also warned of possible “downside risks” to economic recovery in the member nations of the Organisation for Economic Cooperation and Development (OECD), a grouping of 30 of the world’s richest economies.
“Oil demand recovery in the OECD will likely remain sluggish,” it said, adding: “Demand growth in 2010 derives entirely from outside the OECD.”
The IEA said 2010 demand would rise 1.7 percent from 2009 to 86.3 mbd.
The report also explained that much of that increase would come from Asian markets and some of it from Latin America and the former Soviet Union.
In the United States, the world’s biggest economy and largest oil consumer, the IEA said “demand continues to fall relative to a very weak baseline.”
“The US economy remains fragile,” the IEA added.
Oil prices extended their losses after the publication of the report, with New York’s main futures contract, light sweet crude for delivery in February, falling 45 cents to 78.94 dollars a barrel in trading.
“The IEA is still more optimistic than the US Department of Energy that forecasts a demand increase of 1.08 mbd for 2010 and whose projection has also been revised slightly downwards,” Germany’s Commerzbank said in a note.
In its report, the IEA said top producers such as Russia and Saudi Arabia were now increasingly switching their supplies to growth markets in Asia away from traditional big buyers in Europe and the United States.
“Saudi Arabia has been increasingly diverting both grades (Arab Heavy and Arab Medium crude oil) to meet growing domestic power generation and higher sales into Asian markets,” the report said.
Saudi exports of Arab Heavy to Europe in the first nine months of 2009 were down to just 25 kbd — a crude oil measurement unit — from 90 kbd in 2008 and 110 kbd in 2007, while export volumes to Asia have gone up, it added.
Russia is following a similar trend, with the inauguration in December of a new pipeline and Asian export terminal in eastern Russia and “a rerouting of crude oil from Baltic and Black Sea ports to the east” in 2010, the IEA said.
The IEA study also reported a surge in oil prices earlier this month because of the Arctic chill in Europe and the United States, with prices rising to 15-month highs but later easing to between 78 and 80 dollars per barrel.
“The weather-related surge in prices that ushered in the new year may prove fleeting” because of a backlog in supplies,” the IEA said, adding that the market would look for “signs of economically-driven oil demand growth.”
Political tensions in Iran, Nigeria and Russia have also helped boost prices in recent weeks by raising the prospect of supply disruptions, the IEA said, pointing in particular to a brewing Russia-Belarus oil transit dispute.