By SEBASTINE OBASI
World oil demand growth will be slightly higher than previously thought in 2014, at 1.32 million barrels per day (bpd), the International Energy Agency, IEA, said in its monthly Oil Market Report, offering a more bullish demand outlook than other government forecasters.
In the report, the Organisation of Petroleum Exporting Countries, OPEC estimates 2014 oil demand rising by 1.14 million bpd.
It also stated that OPEC needs to pump more oil this year to reach its target of 30 million barrels per day and meet rising demand as China, builds its reserves and stocks in industrialised countries remain low.
The IEA report also stated that turmoil in producers such as South Sudan and problems at Kazakhstan’s Kashagan field and elsewhere saw the West’s energy watchdog cut its estimate for non-OPEC supply growth by 100,000 bpd to 1.5 million bpd for the year.
That will result in demand for OPEC crude rising to about 30 million bpd this year, the IEA said, a 200,000 bpd increase on its previous estimateand in line with the exporter group’s own output target.
”Crude prices remain elevated and forecast balances call for a significant rise in OPEC production from current levels for the second half of the year.
”While OPEC has more than enough capacity to deliver, it remains to be seen whether it will manage to overcome the above ground hurdles that have plagued some of its member countries lately,” the report said.
It was reported that turmoil in Libya and other OPEC members has hampered crude oil supplies in recent years. However, the IEA said the OPEC members produced 29.9 million bpd in April, a monthly increase of 405,000 bpd led by Iraq, Saudi Arabia, Kuwait and Algeria.
The agency, which advises the United States and other industrialized countries on oil policy, said OPEC was expected to keep its output target unchanged when it meets in Vienna, Austria, on June 11, a level it said would be insufficient in the second half of this year when consumption increases.
”In order to balance forecast demand, OPEC countries would need to hike third quarter production by another 900,000 bpd from April levels,” it said.
”Whether Libya can keep its ports open and unlock its exports is unclear. Meanwhile, Iraq faces renewed security threats in the north, while outside OPEC new politically driven disruptions have intensified in Colombia and South Sudan.”
The IEA said a surge in Chinese imports suggested that the world’s number two oil consumer was building its strategic reserves of oil, which could tighten global markets.
It further said that the Organisation for Economic Co-operation and Development (OECD) commercial stocks rose by 52.1 million barrels in April, trimming their deficit to the five year average, though those inventories remain tight by historical standards.