Oil demand is set to soar

A LEADING energy think-tank has again upped its forecast for global oil demand this year but signalled that crude prices could soon fall back from their record highs.

The Paris-based International Energy Agency claims oil supply from countries outside the Opec cartel is set to rise by as much as 1.4m barrels a day over the coming months.

'Barring unforeseen developments, and assuming a much discussed increase in Opec capacity, this should help to alleviate pressure on the supply side,' it said.

Oil prices soared to new highs yesterday with Brent crude in London closing above $50 a barrel for the first time ever - almost 71% up on the beginning of the year.

Brent was down 1 cent at $50.65 today while US light crude fell 2 cents to $53.62. The price surge has come despite burgeoning output from Opec. The IEA said the cartel hit 29.9m barrels a day in September after a 540,000 barrel increase from Iraq.

Demand from China has fuelled much of the price rise. The IEA now believes oil demand will hit 82.4m barrels a day this year, up 240,000 barrels on its previous forecast. It has revised down its 2005 forecast by 70,000 barrels to 83.9m a day.

Three UK power plants, including Coryton in Essex, are up for grabs after Shell kicked off the £1.7bn sale of its Intergen joint venture with Bechtel. Shell is also thought to have received a bid for its £1bn liquefied petroleum gas business from Kohlberg Kravis Roberts.