Global oil demand will hit a record high this year, the International Energy Agency (IEA) said today, revising up consumption estimates as the world economy recovers from recession.

The Paris-based adviser to industrialised economies raised its forecast for world oil demand growth this year to 1.67 million barrels per day, up 100,000 bpd.

The agency said in its monthly Oil Market Report that world oil demand would reach an average of 86.6 million bpd this year, up from 84.93 million last year.

The previous record high for world oil demand was in 2007 before the global financial crisis and economic slowdown.

"There are signs of oil demand picking up in North America and the Pacific, Asia and the Middle East although consumption in Europe still looks weak," David Fyfe, head of the IEA's Oil Industry & Markets Division, told Reuters.

But the extra demand will largely be met by production from outside Opec.

The IEA raised its forecast for non-Opec output this year by 220,000 bpd to around 52.0 million bpd due to higher output by Organisation for Economic Co-operation & Development (OECD) countries. Overall, non-Opec supply is expected to rise by around 500,000 bpd this year.

As a result, the IEA estimated demand this year for Opec crude and stocks would fall by 200,000 bpd to 29.1 million bpd.

Oil prices were steady after the IEA report, with benchmark US crude oil futures for May trading around $83.54 per barrel, down 80 cents, by 0900 GMT.

Total Opec production declined in March, the IEA said, but this was largely due to a fall in production by Iraq, which is not bound by Opec output targets.

It said production by the 11 Opec countries bound by output targets rose by 30,000 bpd, taking their compliance as a group with promised output cuts to around 55% at the end of March, down from its previous estimate of 56% at the end of February.

Oil stocks in industrialised countries that are members of the OECD rose to around 60 days of forward demand at the end of February from about 59.5 days at the end of January, the IEA said.

Source: Upstream

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