Global Oil Consumption Rising; LNG Is Wild Card

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". . .global petroleum use should climb well above increase in non-OPEC supplies."

Even with the drop in European consumption, global petroleum use should climb well above the increase in non-OPEC supplies, according to Scotia Capital Economist Patricia Mohr.

While consumption began to turn around in the Q409 and is expected to advance to 86.2 million barrels per day (mbpd), she warned that a significant increase in natural gas liquid supplies linked to massive LNG development in the Persian Gulf represents a 'wild card' in the forecast.

As a result, the call on OPEC crude, which used to measure market tightness, should edge up in 2010 to 28.8 mbpd, she said.

"While OPEC has not yet announced any plans to call an emergency meeting in view of recent price slippage, several OPEC producers are calling for tighter OPEC compliance (only 55%) with pledged production cuts—agreed in late 2008," she said. "Major Gulf producers (Saudi Arabia, Kuwait and the UAE) remain the most compliant, with Nigeria and Angola the least."

China will remain the leader in growth with a demand increase that "may prove conservative" of about 8%. She said that while China's 'strategic oil stockpiling' will likely be limited this year, a second round will get underway in 2011 to emulate or eventually surpass IEA countries' 90-day petroleum reserves.

As the second-largest auto market in the world, the economist highlighted India’s rapid gasoline growth and the fact that its petroleum consumption saw little impact from the global credit crisis late in 2008. While India is a much smaller consumer than China, its refining and marketing capabilities are being stretched to the limit, though higher LNG imports and rising domestic natural gas output on the east coast are trimming fuel demand.

As for the U.S., use may have been soft early in 2010, but it started to pick up in March and is now mounting a solid recovery.

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