IEA: OIL STOCKS LOWEST SINCE FEB97, BUT DEMAND TO BE LOWER
--Lower Latin American Demand Due to Accounting Revision
PARIS (MktNews) - The International Energy Agency revised down Friday its forecasts for global oil demand and revised up slightly its outlook for non-OPEC supply this year, but warned that diminishing stocks increase risks of price volatility.
Oil output in January rose by 630,000 barrels per day to 74.6 million b/d, due mostly to higher Iraqi supply, the IEA said in its Monthly Oil Report. Other OPEC producers hiked output by 80,000 b/d, reducing the compliance with output curbs to 76% from 78% in December,
The drawdown in OECD industry inventories accelerated to 2.7 mb/d in December from 1.6 mb/d in November and 700,000 b/d in October, pulling stocks down to their lowest level since February 1997, the IEA said.
"We have argued for several months that the market needs more oil," "Technically, stocks can still go lower, but not without the risk of spot outages and price increases. In the interim, just the prospect of risk increases price volatility."
"Operating minima could soon be reached, triggering a worldwide scramble to find oil," it warned. Price volatility in January was due in part to longer and more expensive transportation routes from distant regions, it noted.
On the other hand, technological advances allow refiners to adjust more quickly to changing prices and demand and to operate with lower stocks, it added. "Such developments all along the supply chain are raising the velocity of oil moving through the system. But, sadly, we can only know how low is 'too low' when we get there."
The IEA revised down its global demand forecasts for the first half by 400,000 b/d, by 100,000 b/d for the third quarter and 400,000 b/d for the fourth quarter, giving a downward revision for the full year of 300,000 b/d.
A large part of the demand revision was made "to eliminate what has proved to be double-counting of alcohol fuels in Brazil," the IEA explained. Elsewhere, the economic recovery in Asia is boosting demand, while tax policy and energy market restructuring is dampening demand in Europe, it said.
On the supply side, forecasts for non-OPEC output were revised up by 100,000 b/d for the second and third quarters and by 200,000 b/d for the fourth, giving an upward revision of 200,000 b/d for the full year.
Thus, the expected call on OPEC crude plus stock changes has been revised down by 400,000 b/d for the first half, by 300,000 b/d for the third quarter and by 600,000 b/d for the fourth quarter, giving a downward revision of 400,000 b/d for the full year. |
