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World, OPEC oil supplies rise, demand remains firm: IEA
AFP
PARIS
Petroleumworld.com 06 14 06
World oil supplies rose by 445,000 barrels per day in May to 85.0 million barrels, with OPEC pumping half the increase, but demand remains firmly steady even though high prices are weighing on consumption, the IEA estimated on Tuesday.
The International Energy Agency drew a broad picture in its monthly report of strongly growing demand for oil products in developing countries in contrast to flat or declining demand in advanced industrialised countries in the OECD.
Real spare production capacity by the Organisation of Petroleum Exporting Countries remained below 2.0 million barrels per day as security problems and pipeline "outages" affected 800,000 barrels per day of output by Iraq and Nigeria, the IEA said.
World demand growth for oil products this year was "broadly unchanged" at 1.24 million barrels per day. This reflected a marginal downward revision from 1.25 million barrels per day.
The agency commented in its monthly report: "Recent strength in China and the US is partly offset by weakness in OECD Europe and Asia, but still results in a 160,000 barrels-per-day upward revision to second-quarter demand growth.
"A booming global economy remains supportive, but high prices are weighing on consumption."
Demand from developing countries outside the OECD "clearly dominates the picture", the IEA said.
Although demand from these countries accounted for only 41.0 percent of world demand, it represented nearly 85.0 percent of global demand growth in 2005-2006.
Apparent demand in China had surged unexpectedly bu 9.6 percent in April.
Meanwhile demand from advanced industrialised countries was expected to have declined in the second quarter of this year.
Of the world increase of 445,000 barrels a day of oil supply in May, supplies from OPEC accounted for an increase of 215,000 barrels per day from the April figure to 29.8 million barrels per day, the IEA estimated.
But "effective OPEC spare capacity remains below 2.0 million barrels per day".
The IEA revised upwards its estimate of overall demand for oil and stock from OPEC by 0.3 million barrels per day to 28.43 million barrels in the second quarter of 2006, rising to 29.5 million barrels per day by the end of the year.
The IEA is the energy market monitoring agency of the Organisation for Economic Cooperation and Development. It said that OECD stocks of crude oil in May had risen to the highest point for 20 years, although this reflected the effect of seasonal maintenance on facilities in reducing the amount of oil that was drawn through refineries.
Overall in April, total OECD stocks of oil cover in relation to demand was steady at 54 days "in view of seasonally rising crude and product demand".
Stocks held by industry in the OECD area of 30 countries had risen by 17.0 million barrels from the March figure and by 58 million barrels from the figure in April 205 to 2,631 million barrels.
In a breakdown of demand trends, the IEA said that demand from the OECD area was expected to show a decline of 50,000 barrels per day on a 12-month basis in the second quarter.
"In spite of recent resilience in US demand, consumption growth remains weak in other major economies."
This would be the third quarterly decline in a row of demand from the OECD area from figures 12 months earlier. But in the third and fourth quarters, this calculation of demand would grow because the baseline 12 months ago had been depressed by hurricane disruption.
The agency revised upwards its estimate of demand in the United States in the second quarter by 170,000 barrels per day but "in all, projected US demand growth remains broadly unchanged at 0.9 percent (in 2006)."
The report concluded that Chinese apparent demand of refinery production plus net imports of products "grew by an unexpectedly robust 9.6 percent year-on-year in April.
"Gasoline demand was very strong, surging by 19.7 percent which is in line with strong vehicle sales.
"On May 24 the government raised the administered price of gasoline and diesel by a reported 9.6 percent and 11.1 percent respectively. This should help reduce the pressure on domestic refiners who have suffered substantial losses under artificially low prices," the IEA commented.
AFP 13 0917 GMT 06 06
Copyright ©2006 AFP. All Rights Reserved.
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