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IEA raises oil demand forecast on better economy

WASHINGTON/ PARIS--The IEA on Friday raised its forecast for global oil demand in 2014 as the world economic backdrop improves, but warned that the crisis in Ukraine could still drag down consumption.

The latest estimate of 92.7 million barrels per day is an increase of 95,000 barrels a day above last month's forecast, with emerging markets expected to provide most of the gain, the International Energy Agency said.

It is also the fourth straight month that the agency is raising its demand outlook.

“Growth momentum is expected to benefit from a more robust global economic backdrop,” said the IEA in its monthly oil market report.

“The pace of growth will likely build through the year, as underlying marcroeconomic conditions improve, but the standoff in Ukraine has increased downside risk to the forecast,” it added.

Apart from a jump in prices on March 3, oil markets have been relatively calm despite the standoff between the West and Russia over Ukraine.

US to Release 5 Mil. Barrels from Strategic Oil Reserve

The U.S. Energy Department said Wednesday a decision to release five million barrels from its Strategic Petroleum Reserve was a long-planned test, amid speculation it related to the Ukraine crisis.

The department's decision for a “test drawdown” of the huge reserve is being done to test new regional pipeline systems in Texas and Louisiana, and has been under discussion “for many months,” the department said.

Department spokesman Bill Gibbons said it is required to undertake the test by law, though the last time a test release took place was in 1990.

Since then, however, there have been other releases undertaken in reaction to events: in 2005, after Hurricane Katrina damaged parts of the crucial oil industry infrastructure along the Gulf of Mexico coastline, and in 2011 to counter global supply disruptions from the Libyan revolution.

The test is a response to the sharp rise in U.S. domestic crude production since 2011, said Gibbons.

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