IEA sees uncertainty in energy demand

The International Energy Agency said in its medium-term energy report that the global financial crisis has turned the economic landscape upside down, with huge implications for the oil and gas sector.

Depending upon what type of economic rebound we see around the world, the IEA report indicated that demand could increase between +0.4% and +1.4% annually after 2009.

Based on a worst case scenario, the Financial Times said OPEC spare capacity next year could reach a "healthy 7.67 million barrels per day or 8% of demand" versus last year's forecast of just 1.67 million barrels.

Despite the seemingly bearish report, crude prices are brushing aside the news and are higher. But if demand remains weak and excess capacity grows, prices could quickly hit a ceiling.