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World oil demand will rise much more than expected this year, the International Energy Agency (IEA) said on Thursday, in the latest sign that the collapse in oil prices is helping to boost fuel use.
The agency, in a monthly report, has raised its forecast for global oil demand growth in 2015 by 280,000 barrels per day (bpd) to 1.40 million bpd, bringing demand this year to almost 94 million bpd.
“Recent oil market strength of course partly stems from unexpectedly strong global oil demand growth,’’ said the Paris-based IEA, which advises industrialised nations on energy policy.
Oil prices have recovered this year after hitting a near six-year low close to $45 a barrel in January. Prices had collapsed from $115 in June 2014 in a decline that deepened after OPEC refused to prop them up and chose instead to defend market share.
The IEA’s upward revision makes it the most bullish on demand growth of the three government forecasters closely watched by the oil market. The two others — OPEC and the US government’s Energy Information Administration — had issued reports earlier this week.
Crude prices initially rose after the release of the IEA report. By 0828 GMT on Thursday, benchmark Brent crude was trading at $65.83 a barrel, up 13 cents.
As well as lower prices, economic recovery and a relatively cold winter helped lift demand in the first half of the year, the IEA said.
The supportive impact of these factors could wane in the rest of 2015.
“Recent months have seen a steady acceleration in global oil demand growth, but due to the temporary nature of many of the factors that contributed to the upside, annual growth may subside in the second half of 2015.’’
The IEA also pointed to strong supply. Production by the Organization of the Petroleum Exporting Countries rose to 31.33 million bpd in May, its highest since August 2012, and is likely to remain above 31 million bpd in coming months, the agency said.
The IEA has raised its forecast of supply growth from non-OPEC producers this year by 195,000 bpd to 1 million bpd, citing an upward revision to US data and fewer summer maintenance shutdowns in other regions.
“Lower oil prices and a drop in capital spending are taking time to curb non-OPEC supply,’’ the report said.
“Despite signs of a slowdown in non-OPEC supply, notably in the US, global production growth remains exceptionally high.’’
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