PARIS, 14 July 2004 — OPEC oil producers increased their output by 635,000 barrels per day in June from the May figure to 28.6 million bpd, well above its official quota target, the International Energy Agency reported yesterday. The increase came despite a fall in production by Iraq of 325,000 barrels per day. But the overall increase was not enough to offset market concerns over strong demand and supply disruptions that have pushed oil prices above $40 per barrel, the IEA said. The IEA also found that the structure of the global oil market may have changed, with surging demand in China and elsewhere in Asia tending to offset a traditional dip in demand in the second quarter.
At their last meeting in Beirut, OPEC ministers agreed to increase their non-Iraq quota ceiling by two million bpd to 25.5 million from July 1.
Excluding production by Iraq, the Organization of Petroleum Exporting Countries produced 26.9 million barrels per day in June or 960,000 more than in May, the IEA calculated. “This compares to a production target of 23.5 million barrels per day in place since April and a target of 25.5 million barrels per day from July 1,” the IEA noted.
The IEA forecast that growth of world demand for oil would slow down to 1.8 million barrels per day next year from a high point for growth of 2.5 million bpd this year. The reason, the IEA said, was that the pace of growth of the world economy would slow.
Most of the extra demand for oil would continue to come from countries outside the 30 industrialized members of the Organization for Economic Cooperation and Development. However, the IEA said that it had revised upward its estimates for OECD demand with the result that forecast global demand would be 81.4 million bpd this year and 83.2 million bpd next year. The IEA study found that in contrast to OECD countries, where demand falls to a seasonal low from April to June, Chinese demand tends to peak during that period.
In addition, the growing share of China and other non-OECD nations in overall demand for oil should continue to offset the annual summer trough in OECD demand, as more fuel will be needed to meet summer air-conditioning requirements in southeast China and other emerging economies, the IEA said.
The report said that oil stocks held in OECD countries had risen by 33 million barrels in May to 2.506 billion barrels or 12 million barrels more than at the same time last year.
Meanwhile, oil prices fell yesterday. In London the price of benchmark Brent North Sea crude oil for delivery in August fell by 31 cents per barrel to $36.32 in late afternoon trading. New York’s light sweet crude for delivery in August lost 40 cents to $39.10 per barrel in early deals.
