PARIS: The "green shoots" of global economic recovery now appear far frailer than expected but should bloom strongly next year when emerging economies will drag up growth and oil demand, the IEA said on Friday.

Recent data shows that American motorists might again hold back on their summer driving this year, and emerging economies together with North America would be the main force pushing strong oil demand when it came, the IEA said.

In the last two months many economists had announced that the global recession was bottoming out and were forecasting a strong recovery in the second half of this year, the International Energy Agency commented.

But "over the past two weeks the mood has suddenly changed, as many leading economic and energy indicators continue to show very weak readings, suggesting that the 'green shoots' have been largely driven by a rebuild of inventories rather than by strong end-user demand," the IEA said.

"We thus remain sceptical regarding the much-trumpeted, strong second half 2009 demand rebound, even if China exceeds expectations," it said in its monthly oil report.

But "in 2010, by contrast, the picture could be dramatically different," the agency said while stressing that forecasts were "perilous" given "the great uncertainty regarding the pace and strength of the global economic recovery."

The agency based its headline outlook in part on the latest forecast from the International Monetary Fund (IMF), published too recently to be fully reflected in the IEA's figures.

The IMF was now expecting global growth of 1.8 per cent next year after shrinkage of 1.4 per cent this year, "a swing of over three percentage points."

The IEA noted that in July a four-month rally in oil prices had run out of steam, leaving prices at eight-week low points of about US$60 per barrel.

In London, on Friday, the price of the benchmark New York oil contract was showing a fall of 20 cents from the closing price in New York on Thursday, to US$60.21 per barrel.

The IEA, the energy monitoring and policy arm of the OECD, held steady its forecast of a 2.9-per cent fall in global oil demand this year, but saw a jump of 1.7 per cent next year.

These figures suggested that global demand this year would fall by 2.5 million barrels per day from the 2008 figure on unexpectedly weak data from the 30 advanced economies in the area of the Organisation for Economic Cooperation and Development.

Next year, global demand would rise by 1.4 million barrels per day from this year's level to 85.2 million barrels per day, "largely led by non-OECD countries."

Production by members of the Organisation of Petroleum Exporting Countries rose by 75.000 barrels per day in June to 28.7 million barrels per day.

This was despite a wave of disruptions to supplies in Nigeria, and was the second monthly increase running by OPEC.

Output by the so-called OPEC-11 countries averaged 26.2 million barrels per day "suggesting compliance of about 68 per cent with announced cuts."

The IEA revised up its forecast of oil supplies from non-OPEC producers this year, owing mainly to unexpectedly strong output by Russia.

And next year, output would be boosted by extra production from Azerbaijan, Brazil, the global biofuel industry, the US Gulf of Mexico and Canadian oil sands.

The IEA focused on data on oil stockpiles or inventories, and on the processing of oil through the refining chain.

At the end of May, "OECD inventories stand some 80 million barrels above the five-year average, and substantial volumes of middle distillate remain in floating storage.

"Refinery throughput forecasts for the third quarter of 2009 have been cut as a result.

"Arguably, middle distillates constitute a better barometer of the economic and industrial climate than gasoline (diesel), so the current sustained weakness only reinforces concerns about the timing and strength of much-heralded economic 'green shoots'."

OECD-area oil demand would rise by 0.2 per cent or 100,000 barrels per day next year to 45.2 million barrels per day as most of the economies in it were set to emerge "gradually" from the deepest slump for more than 50 years.

In this area, North America would probably be the main driving force.

But the IEA said it had downgraded its expectations of the overall trend of oil demand in the OECD area this year "owing to emerging evidence that a strong gasoline season in the US could fail to materialise for the second year in a row."

Outside the OECD area, where there had been zero growth of oil demand this year, demand next year would rise by 1.3 million barrels per day or by 3.5 per cent to 40.0 million barrels per day.

"China, the Middle East and to a lesser extent Latin America will play a prominent role with regards to this demand rebound," the IEA said.

- AFP/yb