Globe's Expected Thirst for Oil(I thirst for 10q)
Keeps Price From Easing Back
By LEAH MCGRATH GOODMAN
DOW JONES NEWSWIRES
January 28, 2005
U.S. petroleum inventories have snapped back into normal range. Prospects appear to be dimming for an OPEC production cut. And the U.S. winter is nearing the end of a mild run.
That cocktail might be expected to push oil prices lower. But as global energy markets brace for another year of potentially blistering oil demand, crude futures show no sign of backing off this month's flirtations with $50 a barrel.
Yesterday, benchmark light, sweet crude futures for March settled at 48.84 a barrel, up six cents, on the New York Mercantile Exchange.
Industry veterans point out that while energy-market fundamentals are improving -- making a case for falling prices -- market participants will resist taking comfort until they see evidence of weaker oil demand.
"The fundamentals look better relative to history, but do they look better relative to current conditions?" asked Mary Novak, an economist for Global Insight Inc., a Lexington, Mass., economic consulting firm.
The Organization of Petroleum Exporting Countries, the Paris-based International Energy Agency and the U.S. Department of Energy's Energy Information Administration all have warned that the world's dependence on oil will increase again in 2005.
While the Organization of Petroleum Exporting Countries has said it will be able to pump enough oil to meet demand, some analysts have expressed doubt.
"Supply won't keep up with demand if we grow at even half the pace of last year," said DeCarlo Larry, head of energy futures in New York for Barclays Capital, investment arm of United Kingdom bank Barclays PLC.
The EIA estimated this month that growth in global oil demand for 2005 and 2006 will average about 2.1 million barrels a day each year, down from last year's 2.6 million barrels a day. Hardly a bold retreat. It also predicts that last year's biggest driver of oil-demand growth, China, is on track to post it highest number ever in the first quarter, at seven million barrels a day, up 200,000 barrels from the prior quarter.
