World oil output falls to 85.5 million b/d in February: IEA

London (Platts)--13Mar2007

The International Energy Agency Tuesday kept its key forecasts for world
oil demand and the 'call' on OPEC crude this year unchanged but said a recent
sharp fall in oil stocks suggest a tighter oil market in the coming months.
In its latest monthly oil market report, the IEA said is expected world
oil demand to average 86 million b/d this year, as weather-related adjustments
to data in Europe and the Pacific were largely offset by US demand strength
and upward changes to China, FSU and India. Oil demand growth in 2007 is seen
at 1.5 million b/d, or 1.8% in the year.
The agency revised downward its estimate for world oil demand in the
first quarter, however, by 350,000 b/d to reflect a mild winter but said it
expected demand to recover later in the year.
Despite the weaker demand due to mild weather, the IEA said industry-held
stocks of oil in OECD countries have fallen over 1.26 million b/d during the
first two months of the year, and could be heading for the largest first
quarter stock draw for over ten years.
In February oil stocks fell by 66 million barrels, according to
preliminary figures, and followed a 8.6 million barrel draw in January when
stocks ended the month at 2.68 billion barrels.
Atlantic Basin refiners usually build crude stocks in the first quarter
so they have stocks to boost products for the driving season when maintenance
has finished. This year they could end seasonal maintenance with both lower
product stocks and lower crude stocks, the IEA said.
"Both the speed of the stock fall and the fact that crude inventories are
drawing counter-seasonally is of greater concern," the IEA said, "...In
reality, stock trends and prices are signaling that higher OPEC exports will
be needed in the months ahead."
On the supply side, OPEC crude output fell to 30.2 million b/d in
January, down 125,000 b/d from the previous month due mostly to cut by OPEC
members, the IEA said.
The agency made only relatively minor adjustments to its estimate for
non-OPEC production this year, trimming its forecast by 40,000 b/d to 50.49
million b/d. This would leave year-on-year growth in non-OPEC supply, not
including new OPEC member Angola, of 1.1 million b/d.
World oil supply rose fell 130,000 b/d in February to 85.5 million b/d
with total OPEC supply countered a modest rise from non-OPEC, the IEA said.