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Monday, December 11, 2017

OPEC oil supply near sustainable capacity - IEA

According to the International Energy Agency’s (IEA) Oil Market Report of 10 November 2004, NYMEX WTI crude oil futures fell nearly USD 7 from mid-October’s USD 55.67 peak amidst high OPEC production, easing distillate markets in Europe and Asia, and rising Gulf of Mexico crude supply. Higher stocks, better sweet crude supply and lower forecast Gross Domestic Product (GDP) growth suggest a seasonal peak. But sustained near-capacity operations are needed to ensure ample winter heating oil supply.

The IEA asks: Has the oil market overshot equilibrium levels and we are seeing the beginning of a correction in the oil prices? Or are we facing a brief interlude in what some believe will be a relentless upward rise in oil prices? In any event, many countries are beginning to feel the impact of high energy and commodity prices on their economies and are revising GDP estimates downwards - early signs of delayed price effects on global economic growth perhaps. The IEA believes that it is too early to tell whether these trends will continue.

World oil supply increased by 0.89 million barrels per day (mbd) in October 2004 to 84.6 mbd. The end of North Sea maintenance, U.S. Gulf of Mexico recovery and ongoing Former Soviet Union (FSU) growth led to a 0.685 mbd gain by non-OPEC suppliers. Non-OPEC supply will rise by a total of 1.1 mbd in 2004 and 1.3 mbd in 2005, with an extra 0.4 mbd of OPEC ‘other liquids’ expected in both years.

October OPEC crude supply rose by 0.215 mbd to 30.0 mbd, near to sustainable capacity as Saudi Arabia held supply above 9.5 mbd. High OPEC output will likely continue in November, with Iraqi output averaging close to September’s 2.2 mbd. Concerns persist about supply risks in Iraq and Nigeria, but OPEC production exceeds the fourth quarter ‘call’ by a wide margin.

OECD industry oil stocks fell 10 mb in September, as hurricanes struck the Gulf of Mexico. The fall was from a 15 mb upward-revised August base, with revisions being centred on Atlantic Basin distillate fuels. Third quarter total oil stocks posted a healthy 0.56 mbd gain, a rate similar to last year, driven by a 0.9 mbd product build.

The global demand forecast is roughly unchanged at 82.4 mbd for 2004 and 83.8 mbd for 2005. Third-quarter assessments are flat for the OECD, but have been trimmed for the FSU on strong export growth and for non-OECD Asia on weaker-than-expected Indian August data.

Statistics on world oil supply and demand (tables and graphs) can be found at the following link on the INTERTANKO website:

Contact: Jan Svenne