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Strategies & Market Trends : China Warehouse- More Than Crockery -- Ignore unavailable to you. Want to Upgrade?

To: RealMuLan who wrote (274)	8/11/2003 12:55:24 PM
From: RealMuLan	Read Replies (1) \| Respond to of 6370

China's recovery from Sars boosts oil demand By Joanna Chung in London Published: August 11 2003 10:10 \| Last Updated: August 11 2003 13:42 China's faster-than-expected recovery from the impact of the Sars outbreak has boosted this year's forecast for global oil demand, the International Energy Agency reported on Monday. The West's energy watchdog revised global oil demand growth in 2003 by 100,000 b/d to 1.11m b/d, for a total of 78.41m b/d this year. It also said global demand in 2004 is now expected to be higher at 79.48m b/d after revisions to its historical data raised the baseline of non-OECD demand upwards. The global supply of oil surged by 916,000 b/d in July to 78.64m b/d, helped by higher volumes from the North Sea and gains in Iraqi production levels. The bulk of the increase was from non-Opec production, which rose by 688,000 b/d. Crude oil prices rallied at the end of July, after spending much of the month near post-Iraqi war highs of close to $32 on WTI and at the top of the Opec's target $22-28 price range, the IEA said in its monthly oil market report. Opec crude supply in July was up 155,000, averaging 26.1m b/d, on higher Iraqi supplies and modest increases from Saudi Arabia and Nigeria counteracting declines from Iran and Venezuela. The cartel's output, excluding Iraq, fell by 60,000 b/d. The energy organisation estimated that gross Iraqi production for July was 855,000 b/d of which 360,000 b/d was used for domestic consumption. Though levels exceeded 1m b/d in late July, uncertainty surrounding Iraq's export capability combined with high prices led Opec to keep its production target of 25.4m b/d unchanged last month. In Iraq, hopes of a higher export target in August and the possibility of restarting exports through the country's northern pipeline - plagued by looting and sabotage since the war - has eased some fears that exports would remain low but the "reliability of those supplies remains to be seen," said the IEA. Except for Venezuela and Indonesia, the Opec-10 was producing up to 1m b/d above target levels with Algeria producing nearly 40 per cent above its quota, according to the IEA. "Talk of 1m b/d of Opec non-compliance would normally signal weakening crude prices. However, these are notnormal times and underlying tightness in the market by end-July, despite apparent overshoot from some key Opec members, has seen prices creep above the top of Opec's $22-28 target range," the IEA said. It suggested that "pressure could mount" for Opec to raise output if prices remained above $28 for 20 working days. But Opec sources have said there would be no automatic increase, fueling speculation that another meeting may be called before the September 24 scheduled gathering, according to the IEA. Industry oil stocks in OECD countries increased by 24m barrels to 2.5bn barrels in June but they were still 129m barrels below last year's levels. Preliminary figures indicate that crude stocks failed to rebuild over the second quarter, leaving forward demand cover unchanged at 52 days. The IEA said prices continued to be supported by low stocks, anticipated seasonal rise in demand, a pick-up in gasoline demand in the US, and stronger economic growth. "Recent economic indicators confirm signs of a pick-up in the pace of US economic recovery. An expected rebound in the long-depressed manufacturing sector will boost demand for industrial fuels....meanwhile, gasoline demand is showing signs of strength," the IEA said. In addition, ongoing uncertainty over Iraqi supplies, the sustainability of Venezuela's recent production levels and renewed unrest in Nigeria have "kept markets nervous and prices high." news.ft.com