The International Energy Agency (IEA) said that oil demand for 2011 will be higher than expected as the global economic recovery speeds up and citing higher than expected consumption in North America and China as the reason. Diesel was the main factor in the increased consumption due to the use of small generators and agricultural equipment in China and the rising demand for gasoline in the US.

The Paris based agency now expects global oil demand in 2011 to rise by 1.3 million barrels per day (bpd), a quarter more than previously forecast. The price of oil has been hovering in the upper $80s for the past two weeks, hitting a high of $90.76 per barrel, the highest for two years.

“Recent harsh northern hemisphere weather, allied to electric power rationing in China, if sustained could push short-term demand, largely for gasoil/diesel, higher”, the IEA said.
In its medium-term projections the IEA says that worldwide oil demand for the period 2009-2015 would increase by an average of 1.4 million bpd annually, which is higher than their previous forecast in the summer.

The Organization of Petroleum Exporting Countries [OPEC] meets this weekend In Ecuador to discuss its production quotas, which analysts believe will remain unchanged. The IEA believe that OPEC will come under pressure next year to increase oil supplies.

The 12 OPEC countries account for two thirds of the worlds oil reserves and one third of the worlds oil production, affording them considerable influence and control of the global oil market.