IEA Raises Oil Outlook for First Time in 10 Months

IEA Raises Oil Outlook for First Time in 10 Months

June 11 (Bloomberg) -- The International Energy Agency raised its global oil-demand forecast for the first time in 10 months on signs that the economic slowdown is abating.

The adviser to 28 nations increased its global oil demand estimate for this year by 120,000 barrels a day to 83.3 million barrels a day, driven by consumption in U.S. and China. Consumption worldwide will contract by 2.9 percent from last year, the biggest drop since 1981, the agency said in its monthly report today.

“These revisions do not necessarily imply the beginnings of a global economic recovery, and may only signal the bottoming out of the recession,” the Paris-based agency said. “It’s a fairly modest uptick. Underlying demand levels remain weak.”

Oil prices have climbed 61 percent this year. They traded above $72 a barrel in New York today for the first time in seven months on growing optimism about an economic recovery and as a weaker dollar drives investors toward commodities. Futures in New York rebounded to a seven-month high of $72.30 after the release of the report from as low as $71.32 earlier in the day.

Confidence in the world economy rose for a third month as U.S. job losses slowed and global production improved, a Bloomberg survey of users showed yesterday. A U.S. Labor Department report on June 5 showed the country lost the fewest number of jobs since September last month.
Tighter Fundamentals

Rallying crude prices have been driven by both tighter supply-demand fundamentals and “short-term flows” of speculative capital, David Fyfe, head of the IEA’s oil industry and markets division, said in a phone interview from Paris.

Analysts expect prices to average $61 a barrel in the fourth quarter of this year, according to the median of forecasts compiled by Bloomberg. Goldman Sachs Group Inc. said this month it expects oil to reach $85 by the end of the year,

The outlook for 2009 consumption in the most industrialized countries, the Organization for Economic Cooperation and Development, was raised “marginally” to 45.2 million barrels a day. Inventories of crude and refined products in these nations amounted to 62 days of demand as of the end of April.
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Oil to ‘Spike’ Without New Investments, Shell Says

Oil to ‘Spike’ Without New Investments, Shell Says

June 8 (Bloomberg) -- Crude oil is set to “spike” without new investments and a price surge is in the making, Royal Dutch Shell Plc Chief Executive Officer Jeroen van der Veer said.

The global energy industry is facing “severe challenges” and the world needs unconventional energy supplies to meet rising demand, he said at the Asia Oil and Gas Conference in Kuala Lumpur today.

Oil’s decline to about $32 a barrel in December from a record $147.27 reached in July prompted explorers to delay or halt projects, a move that will cut supplies and push prices higher as the global economy recovers. Crude has since rebounded, gaining 52 percent this year on signs of economic growth and record production cuts by the Organization of Petroleum Exporting Countries.

“The economy will turn, demand will come back and the overcapacity of supply will disappear,” van der Veer said.
Oil and natural gas won’t be able to meet all the additional demand that’s required, van der Veer said.
Shell, Europe’s largest oil and gas company, forecasts that renewable sources will account for 30 percent of new energy demand, he said.
Crude oil fell as much as 97 cents, or 1.4 percent, to $67.47 a barrel on the New York Mercantile Exchange.

IEA Warning

The International Energy Agency, a Paris-based adviser to energy-consuming nations, predicts that fossil fuels will make up 67 percent of energy use until 2030, according to Nobuo Tanaka, executive director of the group.

It’s essential to avoid an energy crunch in the next two decades and the main problem is a lack of investment, he said at a conference in St. Petersburg on June 5. Read Article... http://www.bloomberg.com/apps/news?pid=20601087&sid=am9pwxTRgZwE