Another point of view on Supply...
May 10, 1999
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OPEC Complies 85% With Cuts,
According to International Agency
An INTERACTIVE JOURNAL News Roundup
The International Energy Agency said Monday that members of the Organization of Petroleum Exporting Countries, excluding Iraq, were 85% compliant with their most recent agreement to cut crude oil output.
In its end-of-April report, the IEA, which is headquartered in Paris, said that "rigorous implementation" of the March agreement has begun.
It said that as a result, OPEC's April crude supply fell by 1.6 million barrels a day to 26.2 million barrels a day. At its March 23 meeting, OPEC members, excluding Iraq, agreed to reduce crude output by 1.716 million barrels a day effective from April 1.
The IEA said that crude supply by all other OPEC members was reduced during April, except for Iraq.
According to the IEA's latest report, April crude output cuts were led by Saudi Arabia, which reduced production by 545,000 barrels a day. Iran, also made significant cuts, lowering output by 370,000 barrels a day. Kuwait cut 230,000 barrels a day and Venezuelan lowered output by an estimated 135,000 barrels a day, according to the report.
It also said that Mexico, which is not a full member of OPEC, cut production and exports in line with its pledge to reduce its monthly production by 125,000 barrels a day from April 1.
Despite the April cuts, however, demand exceeded supply in the first quarter, according to the IEA, which made some minor alterations to its oil-demand forecasts.
It revised its first-quarter demand figure upward by 0.6 million barrels a day to 75.6 million barrels a day. This meant that global demand supplies, instead of building up by 330,000 barrels a day, were drawn down by that same amount during the period.
The agency revised its March estimates for global oil demand in 1999 upward by 90,000 barrels a day to a rise of 950,000 barrels a day to 74.85 million barrels a day.
The IEA, meanwhile, said as stocks in the Organisation of Economic Cooperation and Development were drawn down by 850,000 barrels a day in March, this resulted in a 550,000 barrels a day OECD stockdraw for the whole of the first quarter.
The OECD is a think tank with headquarters in Paris whose members represent 29 of the world's leading economies.
The IEA said that lower refinery runs and late-season heating demand caused oil-product stocks to fall by more than the actual rise in crude oil stocks, which was mitigated by continuing declines in non-OPEC supply, especially in North America.
The IEA said that current indications are that OPEC's compliance in May could be well over 90%. The key to compliance, will be the levels of demand, about which there continue to be "mixed signals."
For the second quarter, the agency lowered its estimates downwards by 0.3 million barrels a day to 72.9 million barrels a day.
The monthly report said that estimated demand gains for Asia Pacific and European countries for 1999 are 50,000 barrels a day and 80,000 barrels a day higher than in its March report.
However, the report showed that demand for the former Soviet Union during 1999 is estimated to be 240,000 barrels a day lower than it was in 1998, which shows a downwards revision of 50,000 barrels a day from the end-March report.
The IEA has revised downwards its call on OPEC crude for the second quarter of 1999 by 0.2 million barrels a day to 25.9 million barrels a day.
Non-OPEC supply is unchanged for the second quarter at 44.2 million barrels a day, including a processing gain of 1.65 million barrels a day, according to the end-April report.
For the whole of 1999, the IEA said it revised "its call on OPEC crude plus stock change" upwards by 0.2 million barrels a day to 27.4 million barrels a day.
It said this adjustment has been driven by higher projected world consumption for 1999.
The IEA said contributing to this is the fact that demand from Korea and Japan and Germany improved significantly in the first quarter of 1999. It also said that there are signs of upward revisions to demand from the former Soviet Union. |
