LONDON (Dow Jones Newswires), June 10, 2010
The International Energy Agency Thursday raised its 2010 world oil demand forecast, on stronger-than-expected demand but said up to 300,000 barrels a day of future U.S. output may be at risk if a U.S. drilling moratorium is extended.
In its monthly oil market report, the Paris-based agency increased its global oil demand forecast by 60,000 barrels a day to 86.4 million barrels a day in 2010.
The revision contrasts with a cut in forecasts by the Organization of Petroleum Exporting Countries Wednesday of about 10,000 barrels a day. OPEC kept its demand view substantially lower than the IEA at 85.37 million barrels a day.
The IEA, which acts as an energy watchdog for largely wealthy nations like the U.S., is generally among the more optimistic about oil demand this year compared with other industry forecasters.
It said that "if North America's strong preliminary estimates are confirmed," oil demand in the Organization for Economic Co-operation and Development, or OECD, "could briefly buck the decline observed in the previous four years."
The agency also boosted non-OPEC output forecasts by 65,000 barrels a day to 52.3 million barrels a day on slower-than-expected North Sea decline.
The forecasted increase comes despite a six months moratorium on most deepwater drilling in the U.S. Gulf of Mexico following an explosion and a huge spill at BP's Macondo well on April 20.
Though it said current output was unaffected, the IEA said the moratorium could, if extended, shave 100,000 barrels a day to 300,000 barrels a day off its forecast on Gulf of Mexico output by 2015. However, the IEA said U.S. regulatory changes will not "necessarily imply a swansong for offshore expansion."
Despite major operational changes in the U.K. North Sea after the Piper Alpha platform tragedy, when a fire killed 167 in 1988, offshore fields developed in the subsequent decade generated more than 300,000 barrels of incremental offshore supply, it said.
The IEA also said supply from OPEC fell by 30,000 barrels a day versus April, and was 29.02 million barrels a day as higher Iraqi output was offset by outages in Nigeria and Angola.
The number would signal a pause in the group's continuous production increase in the past 12 months. But it contrasts with industry estimates published by OPEC itself, which saw production up by 140,900 barrels a day in May to 29.26 million barrels a day.
Oil inventories in industrialized countries also continued to buildup--a source of concern for OPEC which fears a sudden sale of stored crude could hit prices.
The IEA said industry stocks rose by 47.9 million barrels in the OECD in April as both crude and refinery supply came in stronger. It also said forward-demand cover was at 60.5 days, up by more than a day from downgraded March figures.
OPEC has previously said it wouldn't formally consider raising output until forward cover--the number of days needed for consumption--fall to around 52 or 53 days.
The IEA also said preliminary May data indicate OECD inventories and floating storage rose by 19 million barrels and by 6.5 million barrels respectively.
The agency also said estimates of Iran's volumes of stored crude and condensate continued to increase, ranging from 48 million to 50 million barrels by end May compared with between 30 million and 38 million barrels end April. "Unattractive price formulas relative to competing grades and limited demand" for the country's heavy sour crudes have combined to reduce buying interest, it said.
Copyright (c) 2010 Dow Jones & Company, Inc.
Most Popular Articles
From the Career Center
Jobs that may interest you