FOCUS-IEA says OPEC rigorously implements oil cuts
By Richard Mably
LONDON, May 10 (Reuters) - OPEC oil exporters have moved quickly to meet new self-imposed supply curbs, axeing 1.7 million barrels per day of deliveries to global markets in April, the International Energy Agency said on Monday.
The IEA, in its monthly Oil Market Report, estimated Organisation of the Petroleum Countries output in April fell to 26.24 million bpd, putting cartel compliance with the supply limits at a cumulative 85 percent.
''Indications are that May OPEC compliance, measured against the target levels, could be well over 90 percent,'' the agency added. It said that OPEC in total cuts since March last year had sliced 3.7 million bpd from a cumulative target of 4.3 million.
In addition, non-OPEC Mexico cut production and exports in line with its pledges and U.S. oil supply fell because of lower Alaskan output, it said.
Although oil prices have risen swiftly in recent weeks, the production cuts have yet to be corroborated by a major drawdown of the global inventory stockpile which forced oil prices below $10 a barrel in February.
With demand now in seasonal decline, that was probably why oil prices late last week lost ground from recent 16-month highs, the IEA said. Benchmark Brent blend crude futures were valued at $16.35 on Monday after topping $17 last week for the first time since December 1997.
''The serious stockdraw will start in the third quarter and accelerate into the fourth quarter,'' said David Knapp, editor of the IEA report.
Data projections from the IEA showed that, at current levels of OPEC output, world oil stocks would contract by a large 1.2 million bpd this year in the 75 million bpd world market.
The agency indicated that such a sizeable stockdraw might prove too much even for the likes of oil exporting nations, who want to avoid another boom-bust cycle in prices.
''The critical period is likely to be the second half of the year, when both the seasonal and cyclical demand increase. Under these circumstances, compliance and stockdraw might not both continue.''
Improved oil demand among industrialised countries including Japan and South Korea, saw world oil consumption outstrip supply in the first quarter of the year, even before the new supply cuts were implemented.
''Primarily as a result of a substantial upward revision to demand in the first quarter, the balances now show a global stock draw of 330,000 bpd rather than a previously-expected build of 300,000 bpd,'' the IEA said.
It said South Korean demand gained over 10 percent in March and Japan recorded an unexpected rise in consumption. Global oil demand in 1999 is now projected to rise 950,000 bpd to 74.85 million.
A potential fly in the ointment for OPEC remains the growing volume of supplies from the former Soviet territories. Exports raced to 3.6 million bpd in April, a post-Soviet era high, as a slump in domestic demand accelerated the export rush.
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