Singapore (Platts)--22Sep2009/701 am EDT/1101 GMT

Demand for oil in Asia should rebound by 885,000 b/d in 2010, as demand in the region continues to recover from the 2009 global recession, according to a forecast released Tuesday by Singapore-headquartered consultancy,

FACTS Global Energy. FACTS raised its forecast for 2010 growth from a prediction of 541,000 b/d, issued in the spring of 2009.

The consultancy said it expected oil demand across the region to show a fall of 370,000 b/d for 2009 as a whole -- not as big a fall as it predicted in its earlier 2009 forecast, when it said demand could fall by 414,000 b/d. Although it did not give outright demand figures in its forecasts, the consultant's latest data suggests it sees Asia-wide demand coming in at about 24.63 million b/d, this year, and 25.515 million b/d next year.

That compares with recent forecasts from the International Energy Agency of Asia Pacific demand at 25.3 million b/d in 2009 and 25.7 million b/d next year. OPEC, the oil exporter's group, expected to see demand come in at 25.08 million b/d this year in Asia, including what it breaks out as "OECD Asia," "Other Asia" and "China." OPEC hasn't yet given a comparable Asia breakdown for 2010.

FACTS, which is particularly closely listened to by companies in the oil industry east of the Suez Canal thanks to the ties of its Iranian founder and chairman Fereidun Fesharaki, said it was bullish on Asian demand in 2010, but stressed that any demand hike would be starting from a relatively low base after this year's recession.

"The combination of Asia's huge population and low oil consumption per capita ensures that its thirst for oil products will grow, albeit in stops and starts," said FACTS. "Regional petroleum demand is expected to return to robust growth once the recession is over, with China and India expected to drive the incremental demand."

ASIA'S Q4 DEMAND GROWTH TO BE FIRST IN FIVE QUARTERS

The consultancy said demand in Asia should rise by 340,000 b/d in the fourth quarter of 2009, the first year-on-year rise in demand for five quarters.

But in the more immediate term, FACTS said Asian oil demand was likely to stay virtually flat in the third quarter of 2009, as demand growth in China (up 360,000 b/d year on year) and India (up 110,000 b/d) gets offset by sagging demand in Japan (down 320,000 b/d), South Korea (down 105,000 b/d) and Taiwan (down 70,000 b/d).

On a sector-by-sector basis, the consultancy noted that demand had been especially hard hit this year in the naphtha sector.

"In 2009, there is weakness across all products except LPG and gasoline, but the decline in naphtha demand is particularly dramatic. Japan, Korea and Taiwan all experienced year-on-year declines in naphtha consumption as the petrochemical sector is highly exposed to the impact of an economic downturn," it said.

LPG demand was boosted by relatively cheap prices against alternatives, it added.

--Dave Ernsberger, dave_ernsberger@platts.com