18-03-05
OPEC pledged in a report to continue to increase production to meet demand
but warned that shortage of refining capacity was also to blame for high oil
prices. OPEC decided at a meeting in the Iranian city of Isfahan to increase its
production quotas by 500,000 bpd to 27.5 mm bpd, and said it was ready for
another half a million bpd hike if necessary. But the report also pointed out
that "downstream constraints," such as "the persistent shortage
of appropriate refining capacity," were also continuing "to exert
pressure both on product and crude prices." OPEC forecast that world oil demand would grow in 2005 by 1.9 mm bpd, or a
yearly increase of 2.3 %, "resulting in average global demand of close to
84 mm bpd for the current year." Non-OPEC oil supply for 2004 is estimated at 49.7 mm bpd, which is 1.1 mm bpd
higher than the 48.6 mm bpd estimated 2003 figure. Non-OPEC supply in 2005 is
expected to reach 50.8 mm bpd, an increase of 1.1 mm bpd over the 2004 estimate,
the report said.
Source: AFPOPEC to keep production high but warns of refining bottlenecks
"Higher OPEC output is needed to ensure comfortable commercial crude oil
stock levels, both in absolute terms and in days of cover, given expected high
demand in the fourth quarter approaching 86 mm bpd," OPEC said in its
monthly oil market report for March.
"OPEC, on its part, will continue to accelerate efforts to increase
production to meet rising demand and maintaining adequate spare capacity as
current market developments once again underline the importance of its role in
stabilizing the market," the report said. "These efforts are
particularly necessary in light of the ongoing slowdown in non-OPEC
production."
OPEC said this showed a need for "medium-term investments... to address the
industry-wide shrinkage in global spare capacity, particularly in the downstream
sector."
"Although (world) economic growth has been revised slightly down to 4.1 %,
solid consumption in several OECD countries and China has once again led to an
upward adjustment in global oil demand growth," OPEC said. It said that on
the supply side, OPEC crude oil production in February, based on secondary
sources, was estimated at 29.6 mm bpd, an increase of 0.2 mm bpd from the
revised January figure.
It said that US commercial oil stocks were still 40.2 mm bpd above last year's
level. Prices shot to new highs in world oil markets, with New York's main crude
contract above $ 57 per barrel for the first time, underpinned by robust global
demand.