The "dueling forecasts" regarding 2010 global oil demand continue. Contrary to OPEC's forecast, the International Energy Agency is forecasting global oil demand will rise in 2010, as the world emerges from its worst recession since the end of World War II.

In its July Oil Market Report, the IEA said it expects global oil demand to increase by 1.7 percent or by 1.4 million barrels per day (bpd) to 85.2 million bpd. Conversely, OPEC sees 2010 demand remaining essentially flat at 84.6 million bpd.

"We expect demand to rebound based on the forecasts of major institutions," David Fyfe, head of the IEA's oil industry and markets division, told Bloomberg News Friday. "There's still a strong note of caution. Demand data coming in for 2009 is still weak on a trend basis."

Today oil continued its recent move lower on the prospect of a delayed global recovery, falling $1.28 to $59.03 per barrel. Oil has fallen about $14 in less than two weeks.

Further, one year ago tomorrow, on July 11, 2008, oil hit the truly-dizzying - -and recession-inducing -- high of $147.27 per barrel.

Oil demand: 'up in the air'

Economist Richard Felson, who earlier questioned OPEC's 2010 forecast as being a tad too low, told DailyFinance Friday the IEA report, despite its forecast for an increase in global oil demand in 2010, did not convince him that the trend will be up.

"Director Fyfe's comments suggest the IEA is sending a signal that although they expect about a 1 million bpd increase, that forecast could change in a hurry, as new economic data is incorporated into modeling forecasts," Felson said. "The increased likelihood of a U-shaped recovery, which would mean slower growth, points to downward revisions for oil demand forecasts."

As a result, Felson said the oil demand situation "is really in flux right now. The forecast for oil is up in the air. It's like a jump ball in basketball. Demand could go either way. It could rise slightly or it could fall slightly, depending on whether the economic recovery arrives as expected in Q3/Q4, with enormous implications for price."

Oil Analysis: With the IEA and OPEC forecasts, investors now have two mild changes to the 2010 oil forecasts (one seeing demand slightly down, one slightly up). That does not provide a great deal of clarity for investors. Further, given the link between oil prices and U.S. GDP growth ("rising oil prices decrease U.S. GDP growth"), Felson underscored the need for investors to obtain more analysis regarding 2010 global oil demand. In this case, he said investors should also pay close attention to what three major integrated oil companies are forecasting for 2010, and for 2009-2013 global oil demand -- Exxon-Mobil (XOM), BP (BP), and Conoco-Philips (COP) -- when they report Q2 earnings in the weeks ahead. Exxon reports July 30; BP, July 29; Conoco, July 29.

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