IEA sees oil demand firming, Chinese growth a key

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Global oil demand is firming on surprisingly resilient growth in advanced countries, the IEA said on Thursday, warning that uncertainties abound and Chinese thirst for energy is pivotal.

Two key factors which could upset estimates for the price of oil are strains over sovereign debt in advanced countries and the pace of growth in China where a "much-dreaded" slowdown has yet to materialise, the IEA said.

The effects of the BP oil-spill disaster in the Gulf of Mexico might curb oil exploration and production slightly in the medium term, the IEA said.

But it noted that a severe tightening of regulations after the Piper Alpha incident in the North Sea in 1988 had been followed by vigorous expansion of new fields.

The International Energy Agency revised up its estimate of global demand by 60,000 barrels per day to 86.4 mbd this year, saying initial data on economic activity in advanced countries was stronger than expected.

The agency estimated that demand for oil in the whole of 2010 would rise by 2.0 percent or 1.7 mbd from the level in 2009, driven almost entirely by demand from outside the area covered by the 31 advanced countries in the Organisation for Economic Cooperation and Development.

The decline of oil production from the North Sea this year was set to be slower than expected, the agency said in its monthly assessment of trends, pressures and outlook for the oil market, having revised downwards its overall projections last month

© 2010 AFP

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