Paris, France, May 11--Global oil demand this year is set to be slightly higher than previously expected, as the market readjusts from last year's demand surge, the International Energy Agency (IEA) revealed.
Oil demand is now seen rising by 2.2 percent this year to 84.3 million barrels per day, the IEA calculated on Wednesday, revising up by 0.1 percentage points its April forecast.
"The oil market is still rebalancing from last year's demand surge," the IEA judged.
It said that demand pressures in China and the United States had continued to ease, and that it had revised downwards its estimate of demand in Europe, but consumption in some other regions had risen.
Demand by countries in the Pacific, the rest of Asia, the former Soviet Union and the Middle East had increased, the agency said in its May report.
The rise in US stocks, coinciding with high prices, was prompting the widest divergence in opinions about the established relationships between stocks and prices, the IEA said.
The agency held the view that this relationship had broken down.
"Some see the co-existence of high prices and high US stocks as a speculative phenomenon, others as a harbinger of pending price weakness. Others, including ourselves, see it as both a cyclical and a regional issue," it said.
The agency raised the possibility of a rapid tightening of the US crude market, "particularly if currently unfavourable price differentials continue to hamper imports".
Overall, world demand for oil in the first quarter of 2005 seemed to have been slightly less strong than had been expected, rising by 1.83 million barrels per day or by 0.29 million barrels less than forecast.
Growth of demand had slowed down sharply in China and the United States which had been the main forces behind demand growth in 2004.
Demand in China had grown by 4.5 percent or by 280,000 barrels per day, compared with a surge of 19.3 percent in the first quarter of last year.
Demand in the United States had grown by 1.2 percent compared with 1.7 percent in the previous period.
The IEA was also relativly reassuring regarding consumption expected in the fourth quarter of this year.
Analysts have expressed some concern about the outlook for this tense period for oil supplies as winter, and demand for stocks of heating fuel, builds up in the northern hemisphere.
But the agency said that it expected growth of demand to slow to 1.7 million barrels per day after an increase of 2.4 million barrels per day in the fourth quarter of last year.
However, the IEA conditioned this by saying that events depended on the severity of the weather and the strength of growth of the US economy.
China's fourth-quarter demand growth was projected at 8.0 percent, down from an "apparent" 11.5 percent surge a year earlier. The IEA noted signs, such as slowing auto sales, that government efforts to slow the economy, and thus energy demand, may be taking hold.
On the supply side, the IEA said that supplies had risen by 0.435 million barrels per day in April from the March figure to 84.5 million barrels per day.
Members of the Organisation of Petroleum Exporting Countries had increased their output by 480,000 barrels per day to 29.4 million barrels.
Expected demand for OPEC oil in 2005 remained at 28.5 million barrels a day or 300,000 barrels more than in 2004.
The IEA was created after the first oil shock in the 1970s mainly to help countries in the Organisation for Economic Cooperation and Development to ensure that they had adequate supplies of energy.
The agency said that oil stocks in OECD countries had fallen by 5.0 million barrels in March from the February figure to 2.587 million barrels, representing 53 days of consumption or two days more than 12 months ago.
However, on a 12-month comparison, the amount of oil in stock had risen by 119 million barrels.
