An upwards revision to world oil demand means the West will need more oil from the OPEC cartel this year and next than previously thought, the International Energy Agency
(IEA) said. IEA reported that the "call on OPEC oil" would be 400,000 barrels per day (bpd) greater this year than it previously forecast, at 27 million bpd.
Next year the call on OPEC oil will be 300,000 bpd more than earlier estimates, although the absolute level is expected to sink to 26.8 million bpd in 2002 because of more production expected outside the cartel.
The big revision paints a more bullish picture for global oil markets, particularly after OPEC's recent decision to slash output by one million barrels per day from September 1.
The IEA's adjustment in OPEC oil requirements derives from a substantial upwards revision in global oil demand estimates for every year from 1999 through to 2002, the agency said. It said delays in receiving reliable data from countries outside the Organization for Economic Cooperation and Development (OECD) were behind the changes, which saw this year's global demand rise by 500,000 bpd to 76.39 million bpd.
"Data for over 40 percent of non-OECD demand become available only about 20 months after the end of the year in question," it said. The IEA said the Organization of the Oil Exporting Countries (OPEC) pumped 27.07 million bpd of crude oil in June, equivalent to about 35 percent of global demand.
The 10 OPEC members bound by supply restrictions pumped 880,000 bpd above quota in July, at 25.08 million bpd. OPEC output including Iraq, which is exempt from quotas because of U.N. sanctions, totaled 27.07 million bpd in July.
The IEA was set up in the 1970s to protect oil consuming nations from OPEC, an 11-member group which controls two-thirds of world exports. OPEC has engineered an oil price rally since 1999 with drastic oil output cuts which have continued this year with three separate reductions, including September's million bpd curb. All of next year's forecast 1.0 percent global demand growth, equivalent to 790,000 bpd of oil, will be met by non-OPEC production growth, the IEA said. The world will consume 77.18 million bpd in 2002, of which 47.25 million bpd will be supplied by producers outside the OPEC cartel, the report said.
Despite the projected rise next year, demand in the biggest oil consuming nations this summer has been weak. The global economic slowdown, particularly evident in the manufacturing sector, contributed to a 0.5 percent contraction in OECD demand for May compared to 2000.
Oil demand in the industrialized world was estimated to have fallen even faster in June and July, according to preliminary data.
"Early reports suggest that oil demand fell in June by 3.8 percent and 2.0 percent in the largest two OECD markets, the U.S. and Japan," the report said. But the IEA still expects a strong rebound in global demand growth in the fourth quarter, when global oil demand will jump 0.7 percent, or 500,000 bpd, versus 2000.
This recovery is expected to continue through to 2002, as the current economic slowdown is expected to abate. Stocks of oil in the industrialized world grew in June in what the agency described as a normal seasonal move ahead of the winter season in the northern hemisphere.
The agency said oil stocks in industrialized nations grew by 160,000 bpd to 2.59 billion barrels, equivalent 84 million barrels above last year's meager levels. However, the total stock level was still "significantly lower" than 1998 and 1999, the IEA said.
Inventories of crude oil declined while those of refined oil products
such as gasoline and diesel surged, the IEA data showed. - (Reuters)