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Group may come under pressure to increase output in 2011

Reuters, December 11, 2010

LONDON – Two of the world's most influential oil forecasters gave sharply different outlooks for 2011 yesterday, as the consumer's watchdog anticipated robust demand and producer group Opec said supply was plentiful.

The Organisation of Pet-roleum Exporting Countries' relatively bearish outlook makes the case for no change in Opec supply policy when the group meets today in Quito.

It forecast 2011 global oil demand growth would increase to 1.18 million barrels per day, only 10,000 bpd more than predicted in last month's report.

In its monthly update, the International Energy Agency (IEA) , an adviser to 28 industrialised countries, lifted its 2011 global oil demand growth forecast by 130,000 bpd to 1.32 million bpd and also raised its projections to 2015.

Oil prices last week hit $90 a barrel for the first time in more than two years, driven, the IEA said, by rising demand.

"Against a backdrop of much stronger-than-expected global oil demand growth and oil prices above two-year highs, Opec may come under pressure to increase supplies to the market in the new year," the IEA said.

Opec has yet to be convinced fundamental strength rather than speculation is at the root of price strength.

Its Secretary General Abdullah Al Badri on Thursday said the group wanted a more balanced market before it would increase supplies, even if prices reached $100.

While the IEA forecast Opec would need to pump 29.5 million bpd next year – up 100,000 bpd from its previous forecast – Opec left its estimate steady at 29.24 million bpd and cited more than adequate supplies.

"Given the existing level of excess inventories, ample crude spare production capacity and idle refinery capacity, the market is expected to have a robust cushion against any sudden surge in demand or disruption in supply," said report.