Oil demand 'recovering faster than expected'

28 September 2009

Global oil demand is set to pick up towards the end of this year, helping to erode the current spare capacity and push prices higher, according to the latest outlook.

Analysts at Wall Street bank Goldman Sachs said on Friday (September 25th) that consumption of the fuel is recovering quicker than first anticipated.

Oil demand has been hit hard by the economic crisis as manufacturing and consumer consumption fell heavily, prompting prices to plunge to less than $33 (£20.78) at the end of 2008.

However, the market has rebounded in recent months, boosted by hopes that the recession will soon be over, to reach its current trading level of around $75 a barrel.

In its latest forecast, Goldman Sachs said demand is already beginning to pick up again.

"The permanent damage from the credit crisis is much less than we had previously thought, which means that we are beginning the recovery from a higher base," analysts wrote.

They added that oil prices are likely to reach $85 by the end of this year, before averaging $90 in 2010.

In early morning training today (Monday), US crude fell 43 cents to $65.59 a barrel by 06:43 BST, while London Brent crude also slipped 43 cents to reach $64.68.

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