Oil climbs as watchdog predicts soaring China demand
Oil climbs as watchdog predicts soaring China demand
Reuters, Singapore
Oil prices rose on Thursday, ending a three-day run of losses
as the West's energy watchdog upgraded its forecast for global
demand growth for this year, with booming China accounting for
almost one-third of the rise.
U.S. light crude traded 30 cents higher to US$36.40 a barrel,
retracing 26 percent of the $1.16 lost in the first three days of
the week.
London's Brent crude climbed 35 cents to $32.34 a barrel.
In its latest monthly report, the International Energy Agency
(IEA) raised its forecast for world demand growth this year by
220,000 barrels a day (bpd) to 1.65 million bpd, saying China's
soaring economy was driving up consumption faster then expected.
The Paris-based agency, which advises 26 industrialized
nations on energy policy, said consumption would hit 80.2 million
bpd in 2004, with China providing 580,000 bpd of incremental
demand, almost double its previous prediction.
"While the sustainability of China's rapid growth rates
remains a matter of debate, structural shifts in Chinese oil
demand set the stage for continued expansion," the IEA said in
its March report.
The IEA estimated that Chinese oil demand in January hit a
record 6.09 million bpd, second only to the United States.
But it warned that producer policy, keeping inventories tight
with output restraints, was encouraging investment funds to
speculate on continued high prices.
"Actions that promote tight balances in the face of
geopolitical uncertainty, limited spare production capacity and
constrained refining capacity provide opportunities for
speculators," it said.
The OPEC producers' cartel, which controls about half of world
crude exports, agreed last month to chop one million bpd from
official output limits from April 1 to avoid any supply glut and
potential price collapse in the second quarter.
The IEA said the policy was partly to blame for making world
oil markets "more fragile than normal" during the transition
between peak winter and summer demand.
It also warned that any slight disruption to supplies from
No.5 oil exporter Venezuela would severely test the United
States, the world's biggest consumer, where wafer-thin fuel
stockpiles have raised worries of a possible supply crunch.
Political tensions have been rising in Venezuela, which has
seen violent protests in recent weeks by those opposed to
President Hugo Chavez. In 2002, a nationwide general strike by
opposition-led forces brought Venezuelan exports to a virtual
standstill.
"Even a short-term supply disruption here could pose serious
challenges," the IEA report said.