OPEC - IEA news from IRNA:
I can't tell you folks how strongly I DISAGREE with IEA's assesment of Asian prospects going forward, but then you already know that, so nuff said.
thr 013
opec-iea
opec production cut bolsters oil markets - iea
vienna, april 10, irna -- opec's agreement to cut production by over
1.7 million b/d has had a major impact on oil markets and has caused
"an about-face" in trends for oil prices, the international energy
agency (iea) has reported.
in its latest monthly oil market report, it noted that oil prices
had "rallied strongly" on the basis of opec's "solid-looking
production cut agreement", reached in vienna last month, and put into
effect from 1 april.
indeed, it reported, prices came close to 17 dollars a barrel for
the american benchmark crude, west texas intermediate (wti), during
march, having slumped to a low of just under 10 dollars at the turn of
the year.
while the iea recalled that some previous opec agreements to
restrict output had been prone to fragility, it said: "this one may be
different".
the agency said the impact of lower prices had encouraged opec to
undertake serious action and engage in "substantive discussions".
"the deep political foundation underpinning the agreement makes
it very difficult to violate ...," commented the report.
given the seriousness of the opec commitment - and restraints
undertaken by some non-opec producers - the outlook for better balance
on markets, especially for absorbing high levels of stocks, was
better, it maintained.
the iea estimated that stockdraw, if all production cuts were
adhered to, could be 450,000 b/d in the second quarter, with less than
50 million barrels being shaved off existing stocks.
in the third quarter, the pace would pick up and inventories would
be drawn down by 124 million barrels, rising to 253 million barrels in
the fourth quarter, assuming no additions to overall opec output were
made, it said.
the question now raised by the iea report concerns the direction of
demand and, fundamentally, if an upturn can be seen in some of asia's
battered economies.
so far, the report said, it was too early to say if asia had
"bottomed out". while the market had been given a boost by colder
weather, particularly in the industrialized countries of the oecd,
there was stagnating, if not declining, demand in other areas.
oecd demand rose a sharp 3.5 per cent, or 1.3 million b/d, in
february, in the nine largest oil-consuming countries. this was
articularly noteworthy in the united states and europe, but even oecd
pacific countries, where demand had been falling, seemed to be
stabilizing.
moreover, first-quarter oecd demand was seen as rising by 800,000
b/d, or by 1.3 per cent.
nevertheless, in non-oecd asian nations, like china and those in
east asia, demand was still declining, reflecting the continued impact
of the regional financial crisis that erupted in 1997, observed the
agency.
more important to the iea, demand in the former soviet union (fsu)
was declining sharply and "plunged" by 16 per cent during march.
given the stronger performance in the oecd zone, the iea has firmed
its demand forecast for global demand in the first quarter of 1999.
demand worldwide should now reach 75 million b/d, up by around 0.4
per cent from a year earlier and 100,000 b/d higher than estimates
made one month ago.
but the iea has cautiously left its annual forecast for 1999 at 74.7
million b/d, up by 1.2 per cent, or 900,000 b/d over 1998.
at the moment, over half of the increase, or some 500,000 b/d, was
expected from north america and the remainder from europe.
"only a very modest recovery in oecd pacific demand is in prospect
at this time," the report added.
moreover, non-oecd demand "is projected to rise by just 130,000 b/d,
or by 0.5 per cent, with a modest increase in asian and middle east
demand offsetting a continuing slump in the fsu".
kz/mhj/ks
end
::irna 10/04/99 11:45
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