World oil demand in 2006 to grow by 1.6-mil b/d: EIA

Washington (Platts)--10Jan2006

World oil demand growth is expected to increase from its 1.2-mil b/d in
2005 to 1.6-mil b/d in 2006, largely on the back of a recovery in US oil
demand, the US Energy Information Administration said Tuesday.

     EIA, in its Short-Term Energy Outlook for January, estimated total world
demand at 85.3-mil b/d in 2006, up from 2005 demand of 83.7-mil b/d.

     World demand growth is projected to increase further to 1.9-mil b/d in
2007 as demand picks up because of economic growth in developing Asian
countries, excluding China, EIA said. The agency said Asian growth had slowed
because of subsidy cuts in countries such as Indonesia and Thailand. 

     Chinese demand growth is projected to stay on its overall annual trend of
about 500,000 b/d, and average about 7.4-mil b/d for 2006, EIA said. 

     US demand is expected to grow 410,000 b/d from last year to a little over
21-mil b/d, said EIA, the statistical arm of the US Energy Department. Much of
that increase is due to US gasoline demand growth, which is expected to
increase 1.7% to 9.29-mil b/d in 2006, EIA said.

     Despite strong growth in demand during 2006, world spare oil production
capacity is expected to increase in both 2006 and 2007 as both OPEC and
non-OPEC supplies increase, EIA said.

    OPEC supplies, which averaged 33.9-mil b/d in 2005, should increase to
34.3-mil b/d in 2006 and 34.6-mil b/d in 2007, EIA said. Non-OPEC supplies,
meanwhile, should grow by about 900,000 b/d from 2005 to 63.2-mil b/d, and by
another 1.6-mil b/d in 2007 to 64.8-mil b/d. "This non-OPEC supply forecast
hinges on the US forecast, and whether a repeat hurricane scenario next summer
takes out production in the Gulf of Mexico again," the agency cautioned.

     The non-OPEC supply gains will come despite continued declines in mature
fields in the North Sea, Mexico and the Middle East and slower growth in
Russia, EIA said. Outside the US, net production increases of 100,000-200,000
b/d are expected in the Caspian, Canada, Angola, Russia, Brazil and Mexico
areas for 2006, the agency said. Large new projects in 2007 are projected to
lead to increases of almost 500,000 bbl/d in Angola, almost 400,000 bbl/d in
the Caspian, over 200,000 bbl/d in Brazil, and over 200,000 bbl/d in Canada,
EIA added. 

     EIA said the increase in spare capacity should ease the current tightness
in the world oil market and moderate the world oil price increases seen during
2005. West Texas Intermediate spot prices are now anticipated to average
$63.27/bbl in 2006, 6 cts/bbl less than EIA's forecast in December, but
$6.78/bbl higher than the 2005 average price of $56.49/bbl.

		--Cathy Landry, cathy_landry@platts.com

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