Global oil demand may rise 1.5 m bpd

Despite a rise in price, world oil demand is seen rising 1.77 per cent or 1.5 million barrel a day (bpd) to 86.1 million bpd in 2007, the US Energy Information Agency said Tuesday in its outlook for April.

This projection is 5 lakh bpd lower than the March estimate.

In 2008, world oil demand growth is seen at 1.6 million bpd, non-OPEC supply rising 8 lakh bpd, and OPEC spare capacity at 2.8 million bpd.

Interestingly, in the January outlook, EIA had said: "if the OPEC surplus capacity is more (than 1 million bpd), then oil markets may be weak in 2008." Geopolitical tensions in West Asia, unanticipated refinery closures in the US and other countries during February and March, reduced petrol production fuelling a rise in prices, the EIA said.

Nearly 50 per cent of the demand growth in 2007 and 2008 is expected to be from rise in demand from China and US. For 2007, EIA projects Chinese oil demand to average 7.7 million bpd, up 5.48 per cent from 7.3 million bpd a year ago.

Oil demand from the US, the world's largest oil consumer, during 2007 was cut by 0.15 per cent from the previous forecast. The US oil demand during 2007 is now expected to average 20.90 million bpd, up 1.5 per cent from 2006.

West Texas Intermediate crude oil, which averaged $66.02 a barrel in 2006, is expected to average $64 a barrel in 2007 and 2008.

However, higher petrol demand is expected to help crude oil prices average $65 a barrel during the US summer.

During the summer season (April-September) the average monthly petrol pump price is projected to average of $2.87 a gallon in May, compared with $2.98 a gallon last July.