LONDON (ICIS)--Draws on oil reserves in the Organisation for Economic Co-operation and Development (OECD) region fell to their lowest levels in the closing three months of 2013 since the fourth quarter of 1999, the International Energy Agency (IEA) said on Thursday.
According to the agency, total industry oil stocks for the 34-member bloc of countries fell by a further 56.8m bbl/day to in December 2013, taking fourth-quarter oil stock draws in the region to 1.5m bbl/day, the steepest quarterly decline since the closing months of 1999.
Total OECD oil stocks stood at 2.56bn barrels by the end of December, 103m barrels below their five-year average for the period, while forward stocks covered 28.8 days of forward demand.
Global oil supplies fell by 290,000 bbl/day month on month in January to 92.1m bbl/day on the back of lower non-OPEC country output.
Supplies were stronger year on year; rising 1.5m bbl/day compared to January 2013 due to non-OPEC production increases and OPEC natural gas liquids (NGLs) production. The IEA held its forecast for non-OPEC supply growth for 2014 at 1.7m bbl/day.
Crude production by the OPEC group of oil-producing nations dropped by 390,000 bbl/day year on year in January, the agency added.
OECD oil growth bounced back during the second half of 2013 as economic recoveries on both sides of the Atlantic started to gain momentum, but non-OECD countries accounted for 90% of the 1.2m bbl/day demand growth in 2013.
OPEC crude supplies rose by a marginal 85,000 bbl/day in January as strengthening Libyan output levels helped to offset a slump in Iraq’s production.
Countries outside the OECD - which comprises most EU nations, Japan, South Korea, Israel, Mexico and North America - are also expected to help drive demand growth in 2014 by 1.3m bbl/day in 2014, “as the OECD resumes its structural decline”, IEA said.
“Demand growth is expected to accelerate in 2014 in line with the broader economy,” the agency added.
Extremely cold January weather in the US helped to support a rally in oil market demand due to a rush on heating fuels, but average benchmark prices weakened month on month, according to the IEA.
The IEA noted that analyst predictions of oversupply and price falls in the oil market have failed to materialise, as a fall in demand from China in light with its economic slowdown has been offset by unexpectedly strong OECD demand, with even European demand increasing in the second half of the year.
“While non-OECD economies are still expected to overtake the OECD in oil demand, the time when that happens has been pushed back to later in 2014,” the IEA said.
“At this time of year, when the global oil market enters a season of lower demand, it is common for market participants to worry about excess supply or the perceived need for OPEC production cuts. Such concerns today would be particularly misplaced, as the market needs to replenish exceptionally low stocks,” it added.