World Oil Demand and Consumption Highest Since 2007

Consumption and worldwide oil demand will reach its highest level since 2007 mainly due to the expansion of rising Asian economies and the cold weather, the International Energy Agency (IEA) is reporting.

The agency, based out of Paris, has estimated that demand for oil will increase by 1.4 million barrels per day (bpd) in 2010. Total demand will remain around 86.3 million bpd, lower than 2007’s 86.5 million, which is 10,000 bpd higher than what was previously expected. This growth comes after consumption had fallen in previous two years.

David Fyfe, head of the oil industry and markets division of the IEA says, “Oil demand in China and Asia has been revised higher by 70,000 bpd from last month, which has more than offset a revision of 60,000 bpd in the OECD.” He also added, “by 2011, we’re expecting something like another 1 million bpd of growth, but it hinges on the economic recovery.”

With the expected growth, global oil demand in 2011 will exceed the record levels set in 2007 – before the economic crisis slowed down consumption. The cold weather in the northern hemisphere has helped crude oil prices soar to 15-month highs, closing at $84 a barrel in January.

Crude supply from the Organization of the Petroleum Exporting Countries (OPEC) rose in December by 75,000 bpd to 29.1 million bpd, which is the same total that the IEA predicted OPEC must produce to balance the market in 2010. There is also a rise in the production of OPEC natural gas liquids, rising by 885,000 bpd to 5.7 million bpd.

Oil supplies from countries outside the OPEC were lowered by close to 200,000 bpd back in November. Now, non-OPEC members are expected to produce around 51.5 million bpd. This growth is mainly driven by biofuels and higher crude production in Brazil, Australia, Colombia, India and the Former Soviet Union. In 2009, supply was only at 51.3 million bpd for non-OPEC suppliers.

At the end of December, crude oil in short-term floating storage fell to 51 million barrels from 55 million barrels recorded in November, concluded the IEA.

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