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Tight supply could push oil prices higher: IEA
By Veronique Dupont
AFP
PARIS
Petroleumworld.com 05 14 07Oil prices could climb still higher this year despite a shaving of demand because supplies of crude oil and petrol are likely to tighten, the International Energy Agency warned Friday.
The IEA focused in its monthly report on political unrest in Nigeria, falls in OECD oil stocks and US petrol reserves ahead of the summer "driving season", and strains in the global refining sector.
The agency reduced its forecast figure for global demand for oil in 2007 by 0.1 million barrels per day from its estimate in April, to 85.7 million barrels owing to mild weather in the northern hemisphere and a slightly lower forecast for demand in China.
But it warned: "With average (petrol) retail prices in the US near record highs at just over three dollars per gallon several weeks ahead of the start to the summer driving season, concerns over supplies are being raised."
In addition, senior IEA analyst Lawrence Eagles noted that China's estimated need for crude was based on "lower apparent demands" in the absence of official figures, but that economic growth figures suggested it could in fact be higher.
"If you look at GDP (gross domestic product) growth in the first quarter, which was over 11 percent, it would imply a much higher level of oil demand in the first quarter than the data we've seen," Eagles told AFP.
In London, oil prices rose after the report was released, also as a result of the chronic violence in Nigeria, dealers said.
In Paris, the influential energy watchdog stressed that "underlying worries about product availability in the summer are concerns that geopolitics could threaten crude supplies, mostly in Nigeria."
It said that since the Organization of Petroleum Exporting Countries was "apparently unconvinced of the need to review crude production before its scheduled September meeting, steady output at current levels would lead to the group undershooting our calculated range for a call on it crude, and thus tightening stock further."
The Paris-based IEA, which represents the interests of consumer countries in the Organisation for Economic Cooperation and Development, warned that a draw on OPEC crude oil stocks "of 900,000 barrels per day over the past six months is unusually high.
"Crude stocks will tighten if OPEC production stays at current levels through to the end of the third quarter - as some officials have suggested."
Although an optimistic view might argue that current crude stocks are adequate, "this report anticipates a thirsty market in the months ahead."
In the United States, the biggest energy consuming country in the world, "gasoline (petrol) stock cover is at a 16-year low for this time of year," and has pushed pump prices to levels last seen in the wake of Hurricane Katrina in September 2005.
The was partly the result of routine refinery maintanence, but the IEA also said that "a spate of problems has hampered the expected recovery in crude throughputs (refining) from the seasonal first-quarter trough in runs."
That was aggravated by the unrest in Nigeria, a major supplier of "high gasoline-yielding light sweet crudes."
On Thursday, gunmen killed two policemen on the outskirts of Port Harcourt, Nigeria's oil capital, police there said, less than two days after three naval personnel were wounded when the construction vessel they were guarding offshore was attacked.
On Wednesday officials said four US oil workers had been seized by gunmen in southern Nigeria, adding to a list of dozens of foreigners taken hostage in recent weeks.
Nigerian production cuts reached 820,000 barrels per day in early May, the IEA said, and are likely to squeeze refineries that will be looking for more light sweet crude next month, Eagles added.
AFP 11 1105 GMT 05 07
Copyright© 2007 AFP. All Rights Reserved.
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