Rising oil prices may threaten Asian demand
Rising oil prices may threaten Asian demand
LONDON (Reuters): Oil analysts expect Asian oil demand this
year to return to the levels seen before last year's financial
crisis but runaway oil prices are threatening to stifle the
recovery, industry experts said.
A survey of eight consultants and the International Energy
Agency projects Asian oil demand averaging 19.74 million barrels
per day (bpd) this year up just 370,000 bpd from 1998 when demand
slumped for the first time in decades.
Asian petroleum consumption in 1997 hit 19.77 million bpd
after many years of high growth which provided the lion's share
of incremental demand for global oil exports.
The poll forecasts demand growth accelerating by 510,000 bpd
in 2000 to reach 20.25 million bpd.
The latest projections for 1999 and 2000 show higher forecasts
than in a similar survey carried out by Reuters in February but
some analysts remained cautious.
They said the speculator rise in oil prices to $23 for
benchmark Brent this week from less than $10 a barrel in February
would slow economic recovery in the region.
"Rising oil prices will nip the bud of recovery," said John
Walterlow, head of downstream oil at Edinburgh's Wood Mackenzie.
"High oil prices may stall recovery," added Irene King of JP
Morgan in New York.
Dollar-denominated oil import bills are ballooning especially
for big oil users like Japan, China and India. A softer U.S.
dollar has provided little help, analysts said.
Half of those polled expected oil consumption in Asia this
year to stay below pre-financial crisis levels, saying that the
rate of growth has so far been slow and will unlikely match those
seen before the crisis.
"We should see robust growth this year but the rate of growth
will not match what we saw back in the mid 1990s," said Ken
Miller, an energy specialist at Purvin and Gertz in Houston.
Deborah White, an analyst at the Paris-based International
Energy Agency (IEA) said world demand growth this year will still
be dominated by North America and only in the year 2000 would the
focus return to Asia.
Analysts were cautious about Japan, Asia's largest oil
consumer where state planners grappling with economic malaise
would prefer to spend less on buying oil.
The latest IEA data projects demand in Japan averaging 5.59
million barrels per day in 1999 with demand picking up only in
the first quarter of this year.
Asia's other oil giant, China is also expected to show some
growth this year with projected demand rising by 3 percent
compared to pre-Asian financial crisis levels of 8-9 percent.
South Korea would provide most growth by percentage with an
extra 110,000 bpd to 2.05 million barrels per day, the IEA said.
India would also suck in extra supplies to feed economic growth
of about 6 percent.
The rest of Asia is expected to increase demand by between a
marginal 1 percent to 2 percent with a downside risk was now
placed on Indonesia as political uncertainties in East Timor
grow.
The latest IEA data showed demand in Thailand still falling in
1999 by 1.3 percent after a dramatic slide of 7.4 percent last
year.