IEA cuts 2006 world demand growth forecast 50,000 b/d to 1.78-mil

London (Platts)--10Feb2006

The International Energy Agency, an adviser to 26 industrialized nations,
Friday trimmed its global oil demand forecast, and said unrest in Nigeria and
Iran's nuclear dispute with the West have so far done little to cut supply.
     Demand in 2006 will rise by 1.78-mil b/d, the Paris-based agency said in
a monthly report, 50,000 b/d less than expected in January, after a spell of
warm weather in the US, the top oil consumer.
     "Unusually cold weather in Europe was largely offset by mild North
American weather and weak US petrochemical demand," the report said. "Pockets
of weakness were seen in other areas, but 2006 is expected to see a recovery
in Chinese and US demand growth."
     Crude in New York has risen from $61/bbl at the end of December, partly
because of concern violence in Nigeria and the Iranian nuclear crisis may cut
oil supply. While the impact on output may increase in future, the IEA could
tap emergency stocks if needed, the agency said.
     "Political instability may have a greater effect on supply in months to
come, but for now the impact has been minimal," the report said. "Strategic
stocks remain another option, if necessary, for covering potential future
supply disruptions."
     The IEA also nudged up a projection for supply outside OPEC this year by
a slight 20,000 b/d to 51.45-mil b/d. Slower-than-expected growth in non-OPEC
production has supported prices in recent months.
     
     OPEC OUTPUT
     OPEC pumped 29.2-mil b/d in January, down 65,000 b/d from December, the
IEA said. Declines in the UAE, Iraq and Nigeria were offset by an increase at
some Venezuelan fields and a 30,000 b/d rise in Iran.
     "New production helped offset Nigerian outages, reducing the net supply
loss to an estimated 45,000 b/d from December," the IEA said. "There was also
an increase in Iranian output."
     World supply dropped by 135,000 b/d last month to average 84.6-mil b/d,
helped by more oil from North and South America, Asia and Africa, despite a
total of 450,000 b/d lost to weather-related disruptions and other outages.
     Demand is set to rebound in 2006 after growing by just 1.06-mil b/d last
year led by the US, where Gulf of Mexico hurricanes hit oil use in 2005, and
by China, the second-largest consumer.
     Oil consumption in China will increase by 5.8% this year, up from last
year's 2.5% gain, the report said. But the IEA trimmed both estimates from
last month's forecasts of 5.9% and 2.9%.
     The IEA left its forecast of the need for OPEC oil in 2006 steady at
28.6-mil b/d. The fourth-quarter 2005 estimate was cut 400,000 b/d on signs of
weaker demand, while the current quarter's figure was raised 200,000 b/d.

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