Global oil demand has been running much faster than previously thought over the last three years, paving the way for an oil supply crunch that has pushed prices to record highs, the International Energy Agency said yesterday.
The shift is just the latest in a series of revisions by the agency and other analysts to correct cautious estimates of demand, which earlier this year distorted oil markets by encouraging OPEC producers to cut back supplies more than necessary.
the revisions to world demand estimates since 2002, mainly in non-OECD countries, have pushed the forecast for this year up by 750,000 barrels per day (bpd) to 82.2 million bpd, the agency said in its monthly Oil Market Report.
The revisions have given a higher baseline for oil demand growth that is running at its fastest level in 24 years. The agency left its demand growth forecasts unchanged at 2.5 million bpd for this year and 1.8 million bpd for next year.
Strong demand growth, particularly in China and the US has helped push oil prices to record highs, with US crude on Tuesday breaching US$45 for the first time in the 21-year history of New York Mercantile Exchange futures.
The pace of consumption has caught out both analysts and producers in the OPEC cartel who early this year cut back supplies because they feared otherwise surplus inventories would build and bring down prices.
The upward demand revisions mean that the agency has now revised up its estimate for the likely total demand, or "call" for OPEC's oil this year, by 400,000 bpd to 27.6 million bpd.
OPEC is producing more than 29 million bpd, the agency estimates, near its highest level for a quarter of a century and leaving it with little spare capacity to cope with any supply disruption.
The OPEC call for the fourth quarter of this year, when northern hemisphere heating demand rises, has been revised up by 600,000 bpd to 28.4 million bpd, the agency said. The OPEC call for next year is up 300,000 bpd to 27.7 million bpd, it added.
The agency said OPEC's effective sustainable spare production capacity shrank to 600,000 bpd last month as the cartel raised output. That leaves a cushion of under 1 percent on world markets, compared to about 8 percent in 2002.
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