Asian oil demand growth reviewed

Asian oil demand growth reviewed

SINGAPORE (Reuters): Slower economic growth, weaker regional currencies and high oil prices will cap incremental petroleum demand in Asia this year, according to a Reuters poll.

The survey of nine analysts predicted Asia-Pacific oil demand will rise by 460,000 barrels a day (bpd) this year to an average 20.89 million bpd.

The poll marks a sharp revision lower from a similar survey in December when analysts forecast demand at 21.43 million bpd, up 730,000 bpd from 2000.

Last year's high oil prices saw demand growth limited to 430,000 bpd following an increment of 830,000 bpd in 1999, according to the Paris-based International Energy Agency.

Asia-Pacific still will remain the fastest growing region for oil consumption in 2001, with China continuing to lead the way. But the region's share of an overall global increase will be sharply down from previous years.

With oil prices expected to remain resilient near $25 a barrel for North Sea benchmark Brent -- less than $4 below the 2000 average at $28.73 -- analysts said the real crunch to demand in import-dependent Asia-Pacific may come next year.

"Gross domestic product rates were high last year and people were generally able to absorb higher energy costs, but GDP has slowed down and people who weathered the price spike in 2000 might not be able to hold on for another year," said David Johnson at Chase Jardine Fleming in Hong Kong.

"If OPEC sticks to its production cuts this year, oil could go up sharply in the second half. That's the biggest risk to demand and will filter through next year," Johnson said.

Asia-Pacific groups the Indian subcontinent, Southeast Asia, Japan, South Korea, Hong Kong, China, Taiwan, Australia and New Zealand.

Energy-intensive economies such as South Korea, Japan and Taiwan are virtually 100 percent reliant on crude and gas imports to meet energy requirements, while India buys in almost 70 percent of its oil needs.

China still is expected to show a healthy growth rate for oil demand, albeit at lower levels than last year when hefty stockbuilding led to an unusually high surge in crude imports.

Most analysts said China would account for up to 75 percent of Asia's incremental oil growth this year, although the IEA reckons China will make up just under half the regional increase.

In its monthly oil market report for April, the IEA pegged annual Chinese demand rising by 220,000 bpd in 2001, 46 percent of the projected Asia-Pacific increase of 480,000 bpd.