Nigeria and other oil producing nations are
expected to bounce back to an increase in oil prices if the latest report of
the International Energy Agency (IEA) is anything to go by.
World oil
demand will rise much more than expected this year, the IEA said in its
release, in the latest sign that the collapse in oil prices is helping to boost
fuel use.
IEA’s report
came at a time the Organisation of the Petroleum Exporting Countries, OPEC,
stuck to its forecast that oil demand will pick up this year. But it warned
that over-supply may still keep a “ceiling” on oil prices, even as it kept on
increasing its own output to a two-year high.
The IEA, in a
monthly report, raised its forecast for global oil demand growth in 2015 by
280,000 barrels per day (bpd) to 1.40 million bpd, bringing demand this year to
almost 94 million bpd.
“Recent oil
market strength, of course, partly stems from unexpectedly strong global oil
demand growth,” said the Paris-based IEA, which advises industrialised nations
on energy policy.
Oil prices
have recovered this year after hitting a near six-year low close to $45 a
barrel in January. Prices collapsed from $115 in June 2014, in a decline that
deepened after OPEC refused to prop them up and chose instead to defend market
share.
The IEA’s upward revision makes it the most bullish on demand growth of
the three government forecasters closely watched by the oil market.
The two others
– OPEC and the U.S. government’s Energy Information Administration – issued
reports earlier last week. Crude prices initially rose after the release of the
IEA report. By last weekend, benchmark Brent crude was trading at $65.83 a
barrel, up 13 cents.
As well as
lower prices, economic recovery and a relatively cold winter helped lift demand
in the first half of the year, the IEA said. The supportive impact of these
factors could wane in the rest of 2015.
“Recent months have seen a steady
acceleration in global oil demand growth, but due to the temporary nature of
many of the factors that contributed to the upside, annual growth may subside
in the second half of 2015,” it said.
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