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IEA warns of big oil supply deficit next year
By Richard Mably
LONDON, Aug 10 (Reuters) - OPEC oil producers next year can look forward to accelerating world petroleum demand growth and only marginal extra supply from non-OPEC competitors, the International Energy Agency said on Tuesday.
The Paris-based thinktank said its initial estimate for oil demand in 2000 showed growth of 1.8 million barrels per day (bpd) to 77 million bpd, double the 900,000 bpd increase this year.
''A first look at world oil demand in the year 2000 shows a very different picture from the last two years, with the demand focus returning to non-OECD countries,' said the IEA.
''The nascent economic recovery in Asia should continue to gather momentum and non-OPEC supply growth will be sluggish.'
Asian demand growth would account for an extra 610,000 bpd of oil consumption with the increase concentrated in China and the other developing countries of the region.
China is already proving a strong factor in the oil market recovery attracting net imports of about 1.2 million bpd in the three months to end-May after purchases were limited by import bans.
The IEA projections came as OPEC supply curbs pushed oil prices on Tuesday to a 22-month high of $20.56 a barrel -- more than double February's historic sub-$10 low.
Oil price rises could be exacerbated by the slow return to growth of supply from producers outside the Organisation of the Petroleum Exporting Countries.
Non-OPEC countries next year were likely only to manage an extra 660,000 bpd of extra supply to 45.25 million after a fall of 140,000 bpd this year.
The agency blamed a heavy slump in upstream expenditure by oil companies after last year's price collapse, saying the industry was expected to remain focused on profitability and cost reduction rather than production and reserves growth.
The result, it said, was likely to be a large imbalance next year between supply and demand to be met by OPEC.
Assuming zero stock change over the year, the call on OPEC oil next year would be a massive 28.9 million bpd -- compared to cartel output in July of just 26.1 million.
OPEC producers have limited supplies since April by an aggregate of some four million bpd and insist they will maintain the limits until the end of March next year.
''What remains to be seen is the response of OPEC producers and a few others to the tighter market conditions during the last quarter of 1999 and the first quarter of 2000,' said the IEA.
''Without any extra oil from OPEC the size of the stockdraw to meet the growing demand will be 3.5 million bpd in the first quarter of 2000. Any Y2K hoarding effects in the fourth quarter could severly compound the problem.'
The IEA's only consolation for oil consumers worried about the rapid rise in prices was that recent data indicated excess stockpiles of oil still have some way to decline before returning to normal.
It said a large upward revision to its estimate of commercial inventories held in industrialised countries meant the end of the glut of stored oil might take longer to arrive than thought previously.
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