Oil supply now comfortable but could tighten - IEA
LONDON - Oil markets look well supplied in the short term but prices could rise in the next few months due to a seasonal increase in demand and production problems in some OPEC producers, the West's energy watchdog said on Thursday.
The International Energy Agency (IEA) said in its monthly report oil was likely to stay volatile with prices responding to political turmoil in Libya, security problems in Iraq and stronger northern hemisphere winter consumption.
"The recent easing of prices may be relatively short-lived," the IEA said. "End-user demand is on the verge of a seasonal ramp-up while refinery throughputs look set for a steep rebound in November and December."
"Although the medium-term outlook seems to be one of easing fundamentals and first-quarter balances look comfortable on paper, the same short-term cycles that have recently undermined prices may soon cause them to come under renewed upside pressure," the agency added.
The IEA, which advises large consuming countries on energy policy, said OPEC oil production fell for a third month in a row in October, dropping 105,000 barrels per day (bpd) to 29.89 million bpd, just below its estimate of demand for OPEC oil this year of around 30 million bpd.
Oil ministers from the Organization of the Petroleum Exporting Countries are due to meet in Vienna on Dec. 4 to discuss the market outlook for 2014 but several ministers have said they expect the cartel's output target to remain unchanged.
OPEC's problem is that demand for its oil is falling gradually as producers outside the group, such as the United States, pump more and more each year.
The IEA expects demand for OPEC oil to fall next year to 29.1 million bpd and says supply from non-OPEC countries is rising rapidly, led by North American tight oil from shale formations in Texas, North Dakota and other states.
Big increases in North America, the North Sea, Russia, and Ghana pushed non-OPEC oil output higher last month and the IEA sees total non-OPEC production growth at 1.3 million bpd this year and at 1.8 million bpd in 2014.
Global demand, meanwhile, is rising less quickly.
Overall oil consumption is forecast to grow by around 1 million bpd this year due to reduced expectations of economic growth. An increase of close to 1.1 million bpd is forecast for next year.
This has kept global oil inventory levels comfortable.
The IEA said total commercial oil inventories in the developed economies of the OECD built counter-seasonally in September as crude stocks swung to a surplus over average levels.
"Liquid supply has remained robust, as surging North American production has so far more than offset disruptions elsewhere," the IEA said. "Despite continued OPEC production problems, for now global oil markets seem well supplied."