Oil market report, the IEA sees higher 2010 crude oil demand

In the latest oil market report, the IEA have raised their crude oil demand forecast increase for 2010 to 1.67 million barrels per day, up 100,000 barrels per day, as the world economy recovers from recession.

In its monthly report, the agency said total world oil demand will reach a stunning 86.60 million barrels per day this year, up 2% from 84.93 million in 2009. In 2007, global crude demand hit a record 86.50 million barrels per day. That was before the onset of the global financial crisis and economic slowdown.

The IEA reports that this extra demand will have to be met by oil production from outside of OPEC. The agency increased its estimates for non OPEC production this year by 220,000 barrels per day to approximately 52.0 million barrels per day. Overall, non-OPEC suppliers are expected to boost production by 500,000 barrels per day in 2010.

As a result, the IEA estimated demand in 2010 for OPEC oil will fall by 200,000 bpd to 29.1 million barrels per day. Oil prices were largely steady after the IEA report, with benchmark U.S. crude oil futures for May trading around $85 per barrel last week.

The IEA noted that oil prices, which hit an 18 month high over $87 per barrel two weeks ago, had risen above the range of $60 to $80 per barrel that OPEC and many other industrialized countries see as ideal for producers and consumers. The agency also said oil prices could stifle world economic growth if they were allowed to rise too far.

“Ultimately, things might turn messy for producers if $80 to $100 per barrel is merely seen as the new $60 to $80, stunting economic recovery while prompting resurgent non oil and non OPEC supply investment,” the IEA report said.

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