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OPEC rivals set to pump more oil next year
The Peninsula
QATAR
Petroleumworld.com 11 24 06
A rise in oil production from the Caspian, Africa and North America will ease Opec’s burden in meeting world oil demand in 2007, but an anticipated supply surge may not materialise.Producers outside Opec may pump enough new oil next year to meet growth in world demand, unlike this year or in 2005, according to the International Energy Agency, as new fields come on stream.
“Opec is going to be challenged in 2007 by the fact that high oil prices have created an environment that encourages more supply and less demand,” said Adam Sieminski, chief energy economist at Deutsche Bank.
A jump in output may ease oil prices that at $60 a barrel, triple those in early 2002, are too high for consuming countries. But setbacks, from rig shortages to hurricanes in the Gulf of Mexico, have delayed new supply in recent years.
Countries outside Opec, including second-largest exporter Russia, pump about 60 per cent of the world’s supply but hold only a quarter of its proven reserves.
When output lags, the pressure falls on the Organisation of the Petroleum Exporting Countries, which sets supply limits for 10 members, to meet global demand of about 85 million bpd.
Expectations of non-Opec growth in 2007 vary widely. Top of the range are the IEA and Opec with forecasts of at least 1.7 million barrels per day, enough to supply Spain. Barclays Capital predicts growth of just 150,000 bpd.
Even so, the IEA, an adviser to 26 industrialised countries, warns that supply can undershoot its estimate by 300,000 bpd to 400,000 bpd a year—enough to tighten the world market.
“Theoretically, we should see an improved supply picture next year,” said Lawrence Eagles, head of the IEA’s Oil Industry and Markets Division. “But adjusting that for supply and demand risks, the market could be more finely balanced.”
Supply risks are rising as companies such as Royal Dutch Shell Plc and BP Plc tap oil in tougher places, like offshore Sakhalin Island in Russia’s Far East and in the Gulf of Mexico.
Meanwhile, oil eased yesterday after crude stocks piled up in top consumer the United States and weighed on already well-supplied markets.
Prices topped $60 this week after a halt in crude shipments at an Alaskan port, but were dragged down nearly $1 on Wednesday by a surprise 5.1 million barrel rise in US crude inventories. Analysts had expected only a slight, 600,000 barrel build.
US crude edged down 34 cents to $58.90 a barrel at 1126 GMT in thin electronic trade, with many dealers absent for the US Thanksgiving holiday. London Brent fell 39 cents at $59.10 after settling down 90 cents the previous day.
“It was a shock announcement, and that really pushed the market down. The drawdown in distillate stocks was nothing too major,” said Gerard Burg, a resource analyst at the National Australia Bank.
The US government’s Energy Information Administration said distillate inventories fell by 1.2 million barrels. But the draw was concentrated in diesel, not heating oil, leaving stocks still above last year’s levels ahead of peak winter demand.
The Peninsula 24 11 06
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