LONDON (Reuters) - Global oil demand may be more robust than expected, even with a slowdown in economic growth in the United States and Europe, the chief economist of the International Energy Agency (IEA) said on Tuesday.
Fatih Birol told Reuters on the sidelines of an oil industry conference that fuel consumption in Asia and in the Middle East was holding up fairly well.
“The decline in oil demand may not be so big,” Birol said. “Oil is needed to burn at power generators in Japan following the tragic accident at the Fukushima nuclear plant.”
“And ... we are seeing good numbers from the Middle East and China. Demand from the Middle East and China is still very strong,” he said.
OPEC, which pumps a third of the world’s oil, cut its global oil demand growth forecast for a fourth consecutive month on Tuesday, citing the downturn in developed countries and efforts by China and India to curb fuel use.
OPEC reduced its forecast of global oil demand growth this year by 180,000 barrels per day (bpd) to 880,000 bpd. Next year it sees oil demand growing slightly faster -- by 1.19 million bpd, down 70,000 bpd from its previous estimate in September.
The IEA, adviser to 28 developed economies on energy policy, is due to publish new oil market estimates on Wednesday, but is currently more bullish than OPEC, forecasting global oil demand growth this year of more than 1 million bpd and an expansion of 1.42 million bpd in 2012.
Birol said oil demand was mainly driven by the economy:
“I see major question marks on the European economy and doubts on the U.S. economy. We also have to look at whether or not the Chinese economy is going to slow down. These are the downside for oil demand,” Birol said.
Birol said some of the projections about when Libyan oil would come back on stream looked optimistic, and that this could keep supply relatively tight.
“We are talking on the basis of one or two data points. Nobody has the exact appraisal of the current situation of the infrastructure. I would be very positively surprised if Libya comes back by 2013 to pre-war levels,” he said.
“The price of oil still over $100 indicates that market fundamentals are tight and will be tight for some time despite the poor economic data we have seen,” Birol said.
“Oil prices are stubbornly high. At the start of the year oil prices were in a danger zone hurting the global economy. Even current price levels are high. Over the $100 per barrel is not making it easy for the global economy to recover.”
North Sea Brent crude oil futures were trading around $108 per barrel on Tuesday and have been above or close to $100 for much of this year.
Executives attending the oil industry conference in London said prices not too far from $100 per barrel were good for the oil industry as they encouraged investment.
“I think everybody is working with a $80-$100 range,” Ayman Asfari, Group Chief Executive of oil services company Petrofac Ltd (PFC.L) said.
“Oil prices have to go up to reflect the fact that you are producing from more difficult complex smaller oilfields.”
Ali Moshiri, President of Chevron Africa and Latin America Exploration and Production Co (CVX.N), agreed: “You need the support of $80 to $90 oil prices to support development.”
Additional reporting by Zaida Espana; writing by Christopher Johnson