IEA raises 2009 oil demand forecast

World oil demand will contract by less than previously expected this year, the International Energy Agency said on Thursday as it raised its 2009 demand forecast for the first time in almost a year.

The agency, which advises 28 industrialised countries, said the upward adjustment followed stronger-than-expected demand early in the year in developed countries. The increase in the estimate for 2009 is the IEA's first since August 2008.

"These revisions do not necessarily imply the beginnings of a global economic recovery, and may only signal the bottoming out of the recession," the IEA said in its monthly Oil Market Report.

Global oil demand is expected to fall in 2009 by 2.47 million barrels per day (bpd) to 83.3 million bpd. The IEA's previous forecast was for demand to contract by 2.56 million bpd.

The IEA joins the US government's Energy Information Administration (EIA) in nudging up forecasts for oil demand. The EIA raised its 2009 estimate by 10,000 bpd earlier this week, following months of downward revisions.

While oil stocks both on land and in floating storage remain "abnormally high," the IEA said inventories were lower expressed as days of forward demand.

Oil inventories in developed countries fell to 62.0 days of forward cover at end-April, a measure closely watched by the Organization of the Petroleum Exporting Countries (OPEC), which considers 52-53 days comfortable.

Higher oil output in May reduced OPEC's compliance rate with its pledged supply curbs to 74 percent, compared with compliance in April of an average of 76 percent, the IEA said.

The IEA raised its forecast for supply from countries outside OPEC by 170,000 bpd for 2009 on higher-than-expected growth from new Russian fields, more robust North Sea production and stronger crude output in Columbia. (Reuters)