World oil supply to struggle to meet Asian demand growth: analysts

Sydney (Platts)--17Nov2010/641 am EST/1141 GMT

The world's oil suppliers will struggle to meet Asia's growing demand for products in the long term, resulting in sharp upward spikes in prices over the next two decades, industry consultancy FACTS Global Energy said in a brief this week.

"In short, the combination of Asia's huge population, low oil consumption per capita and continued economic progress ensures that its thirst for oil products will grow, albeit with stops and starts," FGE said.

"Over the longer term, global oil supply will struggle to keep pace," the consultancy added. "Unlike in the past, we expect the future to be characterized by limits to oil supplies, which at times will cause sharp upward movements in prices and drive concerted moves to restrain oil demand."

Asia's oil demand was relatively unscathed by the global recession, growing by around 315,000 b/d in 2009, while worldwide consumption was estimated to have dropped 1.4 million b/d, according to FGE's data.

FGE has revised its forecast for Asia's incremental oil demand in 2010 to around 1.05 million b/d, double the 491,000 b/d it estimated early this year, and representing year-on-year growth of 4.2%. The revision was due in part to a stronger-than-expected recovery in demand in the first half of this year as the economy rebounded.

Asian demand growth for 2011 is expected to moderate to around 600,000 b/d as economic growth slows, FGE added. Real GDP growth for developing Asian economies is forecast to drop from 8.2% this year to about 7.3% next year.

Asia's overall oil demand is projected to reach 38.1 million b/d by 2030, about 13.2 million b/d above the 2009 level, according to FGE. The region's annual average demand growth is forecast at 2.5% or 741,000 b/d over the period from 2011 to 2020, and 1.3% or 478,000 b/d for 2021 to 2030.

--Christine Forster, christine_forster@platts.com

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