International Energy Agency raises its 2011 forecast for global crude oil demand

PanARMENIAN.Net - The International Energy Agency raised its 2011 forecast for global crude oil demand for a fifth month, saying inventories in developed economies fell to their lowest level in two years.

Worldwide oil consumption will grow by 1.5 million barrels a day this year, or 1.7 percent, to 89.3 million a day, the agency said. That’s a gain of 140,000 barrels a day on last month, driven by developing nations in Asia and signs of recovery in North America. OPEC, which published its own monthly report, said crude’s surge past $100 a barrel in London doesn’t reflect any deficit in supply.

“The inescapable conclusion from our market balances is that the physical market has tightened significantly,” the Paris-based IEA, an adviser to consuming nations, said today in its monthly Oil Market Report. The Organization of Petroleum Exporting Countries maintained that “supply fears are, however, unfounded.”

Crude futures traded above $100 a barrel in London today, having climbed to a 28-month high of $103.37 on Feb. 3 on concern that political turmoil in North Africa might disrupt Middle East oil exports. The IEA and OPEC both said that if unrest in Egypt halts oil shipments through the Suez Canal, flows can be diverted through the Suez-Mediterranean pipeline and other export routes. Closure of the canal would have the biggest impact on Saudi Arabian and Iranian crude exports, while the most-affected customers would be China and Spain, the IEA said.

OPEC, responsible for 40 percent of global supplies, said oil’s rally in London reflects dwindling output from the North Sea and rising purchases among financial investors, rather than any worldwide restriction in supplies.

While OPEC’s estimate of global consumption this year is 1.8 percent lower than the IEA’s at 87.7 million barrels a day, the two organizations make similar estimates for the amount of crude that will be needed from OPEC. The IEA puts this figure at 29.85 million barrels a day, and OPEC at 29.8 million, which is close to current production levels among the group’s 12 members.

The IEA assessed OPEC’s January output at 29.85 million barrels a day, while OPEC’s own estimate was 29.7 million. That rate of supply leaves the organization with spare production capacity of 4.7 million barrels a day, mostly in Saudi Arabia, according to the IEA.

Oil stockpiles in the Organization for Economic Cooperation and Development, which groups 34 of the world’s most advanced economies, fell by 55.6 million barrels to 2.67 billion in December, the IEA said. Inventories amounted to 57.5 days worth of consumption, their lowest in two years and “pretty close to their five-year average.”

OPEC’s members are Algeria, Angola, Ecuador, Iran, Iraq, Kuwait, Libya, Nigeria, Qatar, Saudi Arabia, the United Arab Emirates and Venezuela. The organization will next meet to review its production quota, from which Iraq is exempt, in June.

The IEA raised its 2011 estimate for supplies from outside OPEC by 100,000 barrels a day to 53.5 million a day, on higher- than-expected output from North America. That means non-OPEC production would be 700,000 barrels a day higher than last year.

Brent crude for March settlement on the ICE Futures Europe exchange gained 34 cents to $102.16 a barrel today. On the New York Mercantile Exchange, oil for March delivery dropped 33 cents to $86.38 a barrel as of 13:44 a.m. London time, Bloomberg Businessweek reported.