IEA calls on OPEC to help build up stocks

11 May 2007 17:01  [Source: ICIS news]

LONDON (ICIS news)--The International Energy Agency (IEA) has renewed its call on OPEC to increase oil output before the summer to avoid a sharp decline in global oil stocks.


In its monthly oil market report, the Paris-based IEA estimated total OPEC production for April at 30.35m bbl/day, including Iraq and Angola. This put production for the OPEC 10 at 26.75m bbl/day, exceeding the target set with effect from 1 February 2007 of 25.84m bbl/day.


Nigerian crude capacity shut-ins rose to 815,000 bbl/day in early May, adding to pressures caused by a gasoline market already tightened by an unusually high level of unplanned refinery outages, IEA said.


Unsurprisingly, gasoline remained the primary driver behind oil prices, with US retail prices reaching levels not seen since the post-Hurricane Katrina spike in September 2005.


Seasonal refinery maintenance and a spate of unplanned outages were expected to depress global throughput, IEA said. With demand increasing in June, this implies that there will be a further tightening of product stocks.


Refinery runs, and therefore crude demand, should rise sharply in July (2.5m bbl/day over March) as refiners seek to meet peak summer demand.


Preliminary OECD stock data continued to point to a 930,000 bbl/day draw in first-quarter total oil stocks, following on from a similar draw in the previous quarter. Forward demand cover provided by total oil inventories remained around the five-year average, but gasoline stocks are low in all regions.


World oil output in April rose by 55,000 bbl/day to 85.5m bbl/day, with OPEC supply levelling off near 30.3m bbl/day. Non-OPEC growth in 2007 trimmed to 1.0m bbl/day, plus 0.2m bbl/day of OPEC NGLs. This leaves the 2.3m bbl/day rise in the ‘call on OPEC’ by the fourth quarter running well ahead of expected OPEC capacity additions, implying lower spare capacity later in the year.


Global oil product demand was revised down marginally to 84.2m bbl/day in 2006 and 85.7m bbl/day in 2007 following adjustments to baseline historical data. The changes were centred on the Middle East, but Chinese demand has also been revised down despite strong first-quarter growth.


By: Tony Dillon
+44 20 8652 3214

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