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Economic growth fuels stronger world oil demand-IEA
Wed February 11, 2004 06:00 AM ET
By Barbara Lewis and Jonathan Leff
LONDON, Feb 11 (Reuters) - Global oil demand this year will grow faster than expected, fuelled by economic strength particularly in China, the International Energy Agency said on Wednesday.
The energy adviser to the industrialised countries of the OECD lifted its 2004 growth forecast by 220,000 barrels per day (bpd) to 1.44 million bpd, relieving some pressure on OPEC, which faces tough competition from rising non-cartel production.
In a pre-emptive strike, OPEC on Tuesday agreed to rein in production ahead of a potential supply surplus in the second quarter, when demand is at its lowest.
"Oil demand growth is surging in some developing economies -- led in part by strong economic growth in China and the region -- but appears to be temporarily slowing in the OECD, due to the reversal of one-off factors that boosted growth last winter," the IEA said.
In its monthly report, the IEA also raised its global demand figure for this year to 79.9 million bpd, which could help OPEC to prevent any collapse in prices, analysts said.
"It's a useful amount," said Geoff Pyne, consultant for Sempra Energy of the upward revisions. "It builds in a little bit more comfort for OPEC."
"We are approaching more normal stock levels and price volatility will go down."
HIGHER CALL
The IEA also revised upwards its "call" -- or demand -- on OPEC crude in line with strong oil use in Asia and also the Middle East, where it said car sales have been booming, and a slightly lower output forecast for non-OPEC countries.
However, China, which surprised analysts with explosive demand growth last year, could have reached a plateau at around 5.75-5.8 million bpd, near an historic high, the IEA added.
For Q2, the call on OPEC oil was adjusted to 23.7 million bpd, still sharply lower than an estimated call of 26.2 million bpd in Q1, and around 4.2 million bpd below January output.
These figures imply a second quarter stock build of 2.3 million bpd, assuming Iraqi output of 2.5 million bpd plus OPEC 10's new 23.5 million bpd ceiling. This is above the 1.5 million bpd OPEC's chief economist has said is normal.
January output from the Organisation of the Petroleum Exporting Countries marked its first fall since September, slipping by 145,000 barrels per day to 27.9 million bpd from an upwardly revised December estimate, the IEA said.
Excluding Iraq, output averaged 25.8 million bpd, 1.3 million bpd above the existing production target, it added.
The OPEC cartel on Tuesday announced it would cut official production by one million barrels per day from April 1, as well as cracking down on some 1.5 million bpd of leakage.
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