The "awakening dragon" that is the growing Chinese economy will help boost oil demand in 2013, the International Energy Agency (IEA) said on Friday as it raised its 2013 demand forecast.
According to the IEA, global oil consumption will rise to 90.8 million barrels per day (bpd), a 240,000 barrels per day increase over its previous estimate.
Overall, 2013 consumption will increase 1 percent on 2012. The organization cited higher winter demand in the fourth quarter of 2012 and heightened expectations for growth in China, the world's second largest energy consumer, for hiking estimates.
Economic data from China on Friday, showed a pick-up, with growth accelerating to 7.9 percent in the fourth quarter, from a year ago.
After warning in December of "violent structural changes" as the shift in oil demand moves from west to east, the IEA's latest report likens the global market to a "crouching tiger, hidden dragon," with increased demand from China and decreased supplies from Saudi Arabia.
But the IEA said the global market has "nothing to worry about" from the dip in Saudi Arabian supplies.
"All of a sudden, the market looks tighter than we thought," the IEA said on Friday. "On the demand front, a marked departure in Chinese apparent demand from the preceding low‐growth trend brings to mind Napoleonic metaphors about awakening dragons," the IEA said in the report.
That growth was contrasted with Saudi Arabia's drop in production from 30‐year highs in 2012.
(Read More: New Nation to Become No. 1 Oil Producer)
"It may be too early, however, to declare the start of a new market cycle or a return to the bull market of yesteryear," the IEA added.
"Both Chinese demand and Saudi supply are too complex for hasty interpretations. In hindsight, the latest twists in Chinese and Saudi data may partly reflect fleeting factors."
Oil futures rose last week when Saudi Arabia, OPEC's top producer, slashed oil production by 700,000 barrels per day (bpd) to 9 million bpd during the last two months of 2012.
"The dip in Saudi supply, for one, seems less driven by price considerations than by the weather. Analysts often lose sight of the fact that Saudi Arabia has become its own single largest customer. A dip in air conditioning demand – as well as reduced demand from refineries undergoing seasonal maintenance – likely goes a long way towards explaining reduced output."