The global oil market could be a guiding hand of stability amid uncertain recovery from the economic crisis next year, the International Energy Agency (IEA) said in a rare report of confidence today.
'Markets in 2011 may prove not too hot, not too cold,' the IEA said.
'Whisper it quietly, but we might, just might, be in for some market stability for a while longer.'
The IEA said it was assuming that the oil price next year would average $79.40 per barrel, and that a measure of the global dependency of economies on oil as an energy source would decline by 2.6%.
Today oil prices rose more than 2% toward $77 per barrel as better-than-expected corporate earnings boosted confidence about the economy and lifted markets.
US crude for August delivery was up $1.97 at $76.92 a barrel late this afternoon, having earlier fallen to $74.25.
In London, Brent crude oil for August delivery was up $2.10 at $76.47 a barrel.
The August contract price moved briefly above September as traders bet maintenance in the North Sea would boost Brent in the short term.
Prices were also supported by rising European equity markets and a decline in the dollar. A weakening dollar is bullish for oil because it makes crude cheaper for buyers holding other currencies.
Today's IEA report said that 'despite economic recovery' the growth of demand for oil would slow next year in the OECD area of 31 advanced economies.
Economic recovery in Europe might be threatened by austerity drives in Germany, France and Britain.
But even if a setback or a double-dip recession were averted, and expected 'relatively strong' growth of 1.9% materialised, European 'oil demand will continue to decline in 2011'.
The agency, the energy strategy arm of the Organisation for Economic Cooperation and Development, held its forecasts for growth of global oil demand this year largely unchanged at 86.5 million barrels per day, showing an increase of 1.8 million barrels a day, or 2.1%, from 2009.
The rate of growth in demand would then slow down in 2011 to 1.3 million barrels per day or 1.6% to a total of 87.8 million barrels per day.
Next year, 'growth will be driven entirely by non-OECD countries,' it said, to the extent of 3.8%.
By contrast 'the OECD (area) sees resumed decline' of 0.5%.
New demand is coming mainly from Asia and other emerging economies. Big industrialised users, notably in Europe, are becoming relatively less dependent on oil through efficiency and switching sources.
A telling example is a rapid switch in Germany, the biggest European user of heating fuel, to home boilers which use low-sulphur fuel and raised efficiency by 15% to 20%.
Oil demand in the US is set to fall by 0.5% in 2011, after growth of 1.0% in 2010, the IEA said.
