Oil climbs as watchdog predicts soaring China demand<\/p>\n
Reuters, Singapore<\/p>\n
Oil prices rose on Thursday, ending a three-day run of losses
\nas the West's energy watchdog upgraded its forecast for global
\ndemand growth for this year, with booming China accounting for
\nalmost one-third of the rise.<\/p>\n
U.S. light crude traded 30 cents higher to US$36.40 a barrel,
\nretracing 26 percent of the $1.16 lost in the first three days of
\nthe week.<\/p>\n
London's Brent crude climbed 35 cents to $32.34 a barrel.<\/p>\n
In its latest monthly report, the International Energy Agency
\n(IEA) raised its forecast for world demand growth this year by
\n220,000 barrels a day (bpd) to 1.65 million bpd, saying China's
\nsoaring economy was driving up consumption faster then expected.<\/p>\n
The Paris-based agency, which advises 26 industrialized
\nnations on energy policy, said consumption would hit 80.2 million
\nbpd in 2004, with China providing 580,000 bpd of incremental
\ndemand, almost double its previous prediction.<\/p>\n
\"While the sustainability of China's rapid growth rates
\nremains a matter of debate, structural shifts in Chinese oil
\ndemand set the stage for continued expansion,\" the IEA said in
\nits March report.<\/p>\n
The IEA estimated that Chinese oil demand in January hit a
\nrecord 6.09 million bpd, second only to the United States.<\/p>\n
But it warned that producer policy, keeping inventories tight
\nwith output restraints, was encouraging investment funds to
\nspeculate on continued high prices.<\/p>\n
\"Actions that promote tight balances in the face of
\ngeopolitical uncertainty, limited spare production capacity and
\nconstrained refining capacity provide opportunities for
\nspeculators,\" it said.<\/p>\n
The OPEC producers' cartel, which controls about half of world
\ncrude exports, agreed last month to chop one million bpd from
\nofficial output limits from April 1 to avoid any supply glut and
\npotential price collapse in the second quarter.<\/p>\n
The IEA said the policy was partly to blame for making world
\noil markets \"more fragile than normal\" during the transition
\nbetween peak winter and summer demand.<\/p>\n
It also warned that any slight disruption to supplies from
\nNo.5 oil exporter Venezuela would severely test the United
\nStates, the world's biggest consumer, where wafer-thin fuel
\nstockpiles have raised worries of a possible supply crunch.<\/p>\n
Political tensions have been rising in Venezuela, which has
\nseen violent protests in recent weeks by those opposed to
\nPresident Hugo Chavez. In 2002, a nationwide general strike by
\nopposition-led forces brought Venezuelan exports to a virtual
\nstandstill.<\/p>\n
\"Even a short-term supply disruption here could pose serious
\nchallenges,\" the IEA report said.<\/p>",
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