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Opec holds oil production as BP says energy demand rose

Onshore oil rigs in the sunset
Image caption Oil production and consumption continue to rise

Oil consumption rose by its fastest rate since 2004 last year, according to the latest statistics from BP.

The news came as members of the Opec oil cartel failed to agree on increasing oil production as a way of lowering prices.

Analysts had expected the Vienna meeting to raise output. As a result, oil prices jumped again on fears of limited supply.

The value of a barrel of Brent crude rose $1.07 to $117.85 a barrel.

Benchmark US crude for July delivery rose $1.65 to settle at $100.74 per barrel on the New York Mercantile Exchange.

Production of oil and gas fell sharply in the UK in 2010, though global reserves rose slightly, according to BP.

Oil consumption in 2010 rose by 3.1%, more than double the 10-year average increase, according to BP's annual statistical review.

The rise in consumption came despite rising prices - average oil prices in 2010 for Brent crude were the second highest on record.

Figures also out on Wednesday from the US Energy Information Agency showed weekly crude oil stocks fell while petrol stocks rose.

Opec row

Analysts had expected the high oil price would convince Opec to increase production.

The cartel's secretariat, based in Vienna, had predicted that rising consumption this year would drive demand above its supply.

Saudi Arabia and other Gulf states wanted to increase production to limit rising prices and so ensure continued demand for oil.

However, oil ministers meeting in Vienna failed to agree on a rise in output.

"This is one of the worst meetings we have ever had," said Saudi oil minister Ali al-Naimi.

Venezuela, Iran, Algeria and Libya were reportedly among the countries that refused to raise output.

Image caption Oil production in the North Sea is falling

However, many analysts said it would have little impact on actual production.

"It seems to me that with crude prices as high as they are, most members are already producing as much as they possibly can," said Tom Bentz, director at BNP Paribas commodity futures.

Chinese demand

Much of the increased demand for oil continued to come from China, according to BP.

Chinese oil demand rose by more than 10% or 860,000 barrels a day.

China also drove rising demand for energy around the world. Energy consumption rose by 5.6% - the fastest rate since 1973.

Gas saw the fastest growth of all the fossil fuels, driven by the exploitation of shale gas in the US.

"When all the accounting is done, we all consumed more energy in 2010 than ever before," said Christof Ruhl, BP group's chief economist.

It means CO2 emissions rose in almost every country covered, led again by China, where emissions rose by more than 10%.

Falling UK production

The figures painted a very different picture for oil production in the North Sea.

Norway saw the fastest falls in production, closely followed by the UK.

UK oil production was down 7.7% and UK gas production down 4.3%. At the same time, businesses and households consumed more energy.

"UK and Norwegian oil production has been extremely weak last year, and that trend has continued right through this year," said Amrita Sen, commodities analyst at Barclays Capital.

Production has fallen as fields have run out of oil and because of technical issues at some fields.

"Higher taxes in the UK are not going to help," Ms Sen added.

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