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No let-up on rising crude oil demand

No let-up on rising crude oil demand

New York: Despite crude oil prices staying firmly above $100, oil demand continues to rise, driven principally by steady growth east of Suez. According to a recent report from New York brokers Poten & Partners, consumers in some Asian countries are being shielded from the true extent of rising prices by government subsidies. "The political environment has enabled ravenous consumption growth by protecting end consumers form the rapid escalation of prices," Poten said in a report last week.

Although some countries have decreased subsidies offered to motorists, there is little reason to believe these countries will incorporate free market pricing in the near future, according to the analysts. Continued growth in Asia, supplied by areas other than the Arabian Gulf, should be the main incremental ton-mile driver in the shipping market, Poten believes.

As Asia's appetite grows, the US share of total oil consumption is falling. Between 2006 and 2009 - a period during which total oil demand is likely to have risen from just under 85m b/d to nearly 88m b/d, US consumption as a share of the total is expected to fall from 24.5% to 22.5%. According to the International Energy Agency, global oil demand during the second quarter of this year was just over 86m b/d, marking a decline of less than one per cent over the previous quarter. According to the Agency, oil consumption is expected to continue rising everywhere except in the US and Europe.  [28/7/08]