Chinese growth drives global oil demand: IEA

10:07, June 11, 2010      

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The economic recovery is raising global oil demand amid uncertainty over how sovereign debt crises in Europe might crimp pivotal Chinesegrowth, the IEA said Thursday.

The International Energy Agency (IEA) said in its monthly review of trends in the oil market that the two key factors that could upset estimates for the price of oil were strains over sovereign debt in advanced countries and the pace of growth in China.

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

The agency revised up its estimate of global demand by 60,000 barrels per day (bpd) to 86.4 million bpd this year.

It now expected demand from the 31 advanced countries in the area covered by the Organisation for Economic Cooperation and Development (OECD) to recover from depressed levels in 2009 by 0.2 percent, or 70,000 bpd, an increase of 80,000 bpd from its curtailed estimate last month.

The upward revision was driven by stronger data, mainly from North America, "as the economic recovery gained traction."

But, "total European demand in the first quarter of 2010 turned out to be inordinately weak," partly owing to air travel disruption in April due to a volcanic ash cloud, but also because of economic strains.

It warned that if economic prospects in Europe worsened, "the effects are also likely to be felt outside the region - more notably China, as Europe has become its main trading partner."

The IEA said, "Today, short to medium-term market trends appear to hinge on two main 'game changers' - the threat to global economic recovery from OECD sovereign debt issues, and the sustainability of Chinese oil demand growth."

It added, "China's urgent need for an energy supply to sustain economic growth and raise the well being of its people has become a global market issue."

In the last decade, the three main Chinese national oil companies, CNPC, Sinopec and CNOOC, and other Chinese interests, "have ramped up their upstream investment activities overseas."

Source: Global Times


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