Oil demand and forecasts: getting it wrong again in 2012

Mon Feb 13, 2012 11:13am EST
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By Dmitry Zhdannikov

LONDON (Reuters) - Trying to forecast world oil demand growth is a tricky job at the best of times. This year abnormal levels of uncertainty about the global economy are making the job even more difficult.

Leading energy demand forecasting agencies last week were divided on whether the prospects for demand growth are improving or deteriorating.

The three - the International Energy Agency (IEA) for consumer nations, the Organization of the Petroleum Exporting Counties (OPEC) and the U.S. government's Energy Information Administration (EIA) - have long struggled to accurately predict global oil demand changes.

Last week, the IEA cut its 2012 forecast for a sixth consecutive month to growth of less than 1 percent, or 0.8 million barrels per day. <IEA/M> OPEC also painted a grim picture with a reduced growth estimate of 0.94 million bpd <OPEC/M>.

But the EIA raised its forecast to 1.32 million bpd. <EIA/M>

Some analysts question whether some of the estimates have been cut too deep, too fast and say 2012 may yet surprise on the upside should the economy pick up.

"There is general confusion at the moment about what is happening to demand," said Will Riley, co-manager of the Guinness Atkinson Global Energy Fund.

"There does seem to be a discrepancy between dropping oil inventories and the demand picture, which the IEA are presenting."   Continued...

<p>An oil rig in China's Bohai Sea in a file photo. REUTERS/China Newsphoto/Files</p>