IEA Cuts Oil Demand Forecast

IEA Cuts Oil Demand Forecast as High Prices Curb Use
By Bill Murray
Nov. 13 (Bloomberg)

The International Energy Agency, the adviser to 26 oil-consuming nations, cut its forecast for global demand for the rest of this year and 2008 as prices near $100 a barrel slow consumption in the U.S., Europe and Japan.

Global demand next year will be 87.69 million barrels a day, the IEA said today in its monthly report, 300,000 barrels a day less than its previous estimate. The Paris-based agency reduced its estimate for the fourth quarter by 500,000 barrels a day, to 87.14 million barrels.

The IEA has cut its fourth-quarter forecast three times since August on expectations higher gasoline prices and an economic slowdown in the U.S. will restrain demand in the world's largest energy consumer. Federal Reserve Chairman Ben S. Bernanke said last week the U.S. economy is likely to ``slow noticeably'' this quarter.

``We are certainly seeing a downward revision for 2007 and 2008, and high prices starting to have an effect,'' Lawrence Eagles, chief author of the monthly report, said.

``Consumer spending on transportation fuel in the U.S. is reaching the type of levels in the 1980s'' when inflation- adjusted prices were at similar levels, he said in an interview.

India, China

Oil prices have risen 53 percent this year on surging demand from developing countries led by China and India. Futures reached a record $98.62 a barrel in New York on Nov. 7. Chinese and Indian demand for crude could create a supply ``crunch'' as soon as 2015, the IEA said in a separate report last week.

``The whole fact that we've approached $100 has created a scare for some people,'' said Michael Davies, an energy analyst with Sucden (U.K.) Ltd. in London. ``The underlying fundamentals are that we're expecting tighter markets through 2015.''

Oil demand in the U.S. will be slower than previously expected next year as near-record fuel prices and a slumping housing market depress consumer spending, the IEA said.

Still, while the rapid increase in global prices this year has affected demand, especially in the U.S., ``it is too soon to believe that significant structural changes have taken place to make this lower level of demand permanent,'' the report said.

Stockpiles Fall

Industry stockpiles in the world's most developed economies fell 29.5 million barrels in September to 2.6 billion barrels. Global inventories are 113.9 million barrels lower than a year and Japanese crude stock levels are at their lowest in at least 20 years, the report said.

``The warning flags on demand are out there and we're not into the winter yet,'' said Mike Wittner, a commodities analyst with Societe Generale in London. ``Even with the revisions the IEA has made, the market still expects stock draws into the winter and the first quarter, and that's what the market is keying on.''

In addition, half of the world's growth in oil demand is in China and the Middle East, where consumers benefit from government fuel subsidies, the report said.

Chinese oil demand is expected to remain ``strong,'' driven by economic growth, while rising oil revenue in the Middle East mean that subsidies are ``more easily financed and unlikely to be removed,'' the IEA said.

OPEC Call

The ``call on OPEC,'' an estimate by the IEA of how much crude is needed from the Organization of Petroleum Exporting Countries to balance global markets, was reduced by an average 400,000 barrels a day for 2008 to 31.3 million barrels a day, in part because of lower demand in the world's most developed economies.

The IEA cut its estimate of non-OPEC oil production for 2007 by 35,000 barrels a day to 50.1 million barrels a day, and left unchanged its estimate for 2008 at 51.2 million barrels a day on supply from the U.S., Canada, Brazil and Russia.

Production of crude oil from OPEC's 12 members, including new member Angola, rose 410,000 barrels a day in October to an average 31.2 million barrels a day, the IEA estimated, with half the increase coming from Iraq and Angola.

Crude output from Saudi Arabia, OPEC's largest member, rose 100,000 barrels a day last month, to 8.57 million barrels a day, while Iraqi supply gained 120,000 barrels a day to 2.3 million barrels a day, the highest since April 2004, the IEA said.

Excluding Angola and Iraq, which are exempt from OPEC's output targets, the producer group pumped 27.15 million barrels a day last month, a gain of 195,000 barrels daily. OPEC spare capacity slipped in October to 2.46 million barrels, the report said.

Saudi Arabia Pushes for Extra 500,000 bpd OPEC Hike

Saudi Arabia Pushes for Extra 500,000 bpd OPEC Hike
by Adam Smallman and Spencer Swartz
Nov 12th, 2007

Saudi Arabia is to push for an extra 500,000 barrels-a-day hike in output by OPEC, or 1.8%, as soon as this week if oil prices drive toward $100 a barrel, an official familiar with the situation said Monday.

Speaking the day after Saudi Arabia's Oil Minister Ali Naimi indicated that the 12-member Organization of Petroleum Exporting Countries may discuss a production increase, an official close to the group's policy discussions told Dow Jones Newswires: "The Saudis want another 500,000 barrels a day in the market. They don't like these prices for consumers."

Leaders from the world's top oil producers will meet this weekend in Saudi Arabia's capital, Riyadh to discuss the challenges a potential global recession and an anemic dollar present to their estimated $1.8 billion a day in revenue.

Presidents, sheikhs and a king from the OPEC cartel, which meets more than 40% of the world's needs, are to discuss a raft of challenges to their core business, including soaring costs to projects, heightened environmental concerns that spur a push toward alternative energies, and what, if anything, they can do to prevent record oil prices from destabilizing the global economy.

Senior officials within the Saudi Arabian delegation have made it plain they don't feel comfortable with current oil prices, which have almost doubled from a low of $49.90 a barrel in January to a record $98.62 a barrel for U.S., light, sweet crude last week, and that something must be done.

In Kuwait Sunday, Naimi, OPEC's de facto leader, told reporters: "It is premature" to speak of a production hike, but "when OPEC meets, we will discuss this issue," though it was unclear if he was referring to this week's summit or formal OPEC policy talks by oil ministers due Dec. 5 in Abu Dhabi.

One sticking point is the timing of any such a move. The official said the timing would hinge on talks with other OPEC oil ministers, who will meet Thursday or Friday in a closed session ahead of the summit of heads of state in Riyadh at the weekend.

"If the market progresses (and rises above) $100 a barrel, I think the Saudis will push for something then and not wait until the December meeting," the official said.

But a source familiar with OPEC thinking said Monday that insiders "really don't want this summit to turn into an OPEC policy meeting" and senior officials "are not getting any indication that they'll do anything" this week. It was, the source added, perfectly possible that oil ministers might agree to something late this week.

OPEC Revenue

OPEC's revenue may climb 9% this year to $658 billion, the Financial Times reported Monday, citing the U.S. Energy Information Administration, but, with rising economic concerns driven by a worsening global credit crunch, it is oil and the associated costs of heating fuel and gasoline that some economists now say could be the trigger for a full scale economic meltdown.

But the oil leaders may have little wiggle room when it comes to averting such an event, as many believe a wall of investment cash, not constrained oil flows, lie behind the record prices. Any move to add, say, a million barrels a day of additional oil, or around 3% more than they currently pump, would eat into Saudi Arabia's spare capacity ahead of the worst of winter, and at a time of heightened concern over OPEC member Iran's nuclear program and the future stability of U.S. ally Pakistan.

OPEC members at their last meeting on Sept. 11 agreed to raise output by 500,000 barrels a day from Nov. 1, shared among the 10 members with production quotas, amid growing concerns high oil prices may adversely affect global economies and that demand could outstrip oil supplies as the northern hemisphere's energy consuming nations head into winter season.

According to estimates by Dow Jones Newswires, the OPEC-10 in October were already pumping roughly in line with their new target of 27.25 million barrels a day, with Iraq and Angola, which don't have quotas, pumping a further 3.9 million barrels a day.

"However, OPEC's announcement has not yet dampened upward price pressure, and it is unlikely that these higher volumes will be enough to halt the downward trend in commercial inventories over the next several months," the U.S. Energy Information Administration said.

Indeed, recent output hikes by OPEC have tended to be followed by record high oil prices as investors assume spare capacity is shrinking and demand will outstrip supply.

With no OPEC hike agreed this week, leaders, many of whom hold competing political views, may be forced into issuing a bland communiqué that insiders say seeks to reassure customers they are reliable suppliers of oil and are increasingly responsible toward the environment.

© 2007 Dow Jones Newswires.

OPEC oil output rose in October

OPEC oil output rose in October: Petrologistics
October 24th, 2007
Gulf Times/Doha

OPEC is already raising oil supply in response to record prices and in advance of its deal to increase output from November, a consultant who tracks tanker movements said yesterday.

OPEC’s 10 members subject to output limits, all except Iraq and Angola, are set to pump 27.5mn barrels per day, up from a revised 27.2mn bpd in September, said Conrad Gerber of Petrologistics.

The estimate indicates that OPEC may be relaxing adherence to supply curbs in response to a jump in oil prices, which hit a record high of $90.07 on Friday.
The group on September 11 formally agreed to lift production from November 1
“It’s a surprisingly large increase,” Gerber said. “The Saudis are obviously pushing out more crude in advance of the November increase.”

Saudi Arabia, OPEC’s top producer, is on course to lift supply to 8.95mn bpd from 8.88mn bpd in September, he said.

Other increases are coming from Iran, which is expected to raise output by 50,000 bpd to 3.95mn bpd and the United Arab Emirates, which is forecast to pump 2.65mn bpd, a gain of 60,000 bpd.

Overall output from the 12-member Opec is set to rise 500,000 bpd to 31.4mn bpd, Petrologistics said, on higher shipments from Iraq and Angola.

Iraqi output is expected to increase to 2.2mn bpd this month, up about 40,000 bpd from September, Gerber said.

Exports are rising because the country is exporting some Kirkuk crude from its northern fields, shipments that have remained sporadic since the US-led invasion in March 2003.

Angolan output, on a rising trend as new fields come on stream, is likely to climb to 1.75mn bpd from 1.6mn bpd in September.

Opec, source of more than a third of the world’s oil, agreed on Sept. 11 to raise output by 500,000 bpd from November 1 in a gesture to consumer nations worried by the economic impact of record prices.

According to Petrologistics, they are now pumping oil at the same level from which they started cutting production in 2006. Opec said the 10 were pumping 27.5mn bpd before the cutbacks began.

Oil prices declined yesterday after the Petrologistics estimate was released.
Oil prices extended losses amid worries that slower US economic growth could dampen global demand, dealers said.

Crude futures scaled dizzy heights last week owing to tight supplies and geopolitical tensions in the Middle East region.

Prices have fallen on fresh "concerns over economic growth and, in turn, oil demand growth," Goldman Sachs analysts said.

Additional downward momentum has come from Kurdish rebels offering Turkey a ceasefire on Monday.

– Reuters, AFP


OPEC Raising Output Ahead of Nov Output Hike
by Spencer Swartz
Oct 23, 2007

OPEC oil production is expected to rise this month by 500,000 barrels a day from September as the group's biggest producer, Saudi Arabia, steps up output ahead of OPEC's Nov. 1 deadline to begin providing markets with new supplies, tanker tracker consultant Petrologistics said Tuesday.

The 12-nation Organization of Petroleum Exporting Countries is expected to pump at a rate of 31.4 million barrels a day in October from 30.9 million barrels a day last month.

The group, excluding Iraq and Angola which aren't part of OPEC's quota system, are seen producing about 300,000 barrels a day more than in September at 27.5 million barrels a day, said Conrad Gerber, head of Geneva-based Petrologistics, which bases its figures on movements in the global tanker market.

"We're definitely seeing more production from the Gulf. Saudi Arabia is making more available," Gerber said, noting the kingdom is expected to pump at a rate of 8.95 million barrels a day this month, up 150,000 barrels from September.

Gerber said he didn't believe OPEC would produce in November at the same rate of increase being seen in October. "I don't think we'll go up as much... part of this is the big maintenance program in the United Arab Emirates," Gerber said.

Gerber said non-quota member Angola was expected to boost production by 150,000 barrels a day to 1.75 million barrels a day as new projects enter service in the West African nation.

Nigeria, making incremental headway into returning oil production sabotaged by militant attacks, was seen pumping about 50,000 barrels a day more in October at 2.25 million barrels a day.

Gulf countries Kuwait and the UAE were each seen producing 50,000 and 70,000 barrels a day more this month than in September at 2.62 million barrels a day and 2.65 million barrels a day, respectively.

The Abu Dhabi National Oil Co., or ADNOC, is scheduled to do maintenance at three major offshore oil fields that will ax crude production by 600,000 barrels a day from November for almost a month. State-run Adnoc, which pumps 95% of the UAE's oil, said in late September that it would meet all its term client commitments by "advancing the majority of liftings." Adnoc will do the maintenance, which has been planned for more than a year, at its Upper Zakum, Lower Zakum and Umm Shaif fields.

War-torn Iraq was expected to pump about 60,000 barrels a day more in October than last month at 2.2 million barrels a day, though this could be revised up in coming days, Gerber said.

© 2007 Dow Jones Newswires.

National Australia Bank Raises Oil Price Forecasts

National Australia Bank Raises Oil Price Forecasts Through 2008
By Angela Macdonald-Smith
Sept. 28 (Bloomberg

National Australia Bank Ltd., the country's biggest lender, raised its forecasts for crude oil prices through 2008, citing the ``tight'' balance between supply and demand.

West Texas Intermediate, the U.S. benchmark oil variety, may average $66.50 a barrel this year, up from an earlier forecast of $63, while prices may average $65 next year, up from a previous forecast of $60, the Melbourne-based bank said in a quarterly report. Brent crude, a European benchmark, may average $66.90 this year, and $62.78 next year, it said.

``Reflecting the tight market conditions, forecast crude-oil prices have been revised upwards this month,'' National Australia analysts led by Gerard Burg said in the report. ``In 2008, crude markets are expected to remain tight, supported by OPEC production discipline and strong demand from industrializing nations.''

OPEC's influence over the market is set to increase, as Angola's decision to joint the group at the start of 2007 reduced opportunities for production growth outside the cartel, National Australia Bank said.

``Increasing market power for OPEC will be the most significant development in global oil markets in coming years,'' the analysts said.

Saudi Production from IEA

From IEA's September Oil Market Report (OMR), pages 21-22

The supply estimate for Saudi Arabia in July is also revised up by 50 kb/d to 8.67 mb/d and further to 8.7 mb/d for August. Stronger exports account for the July change. This report uses crude supply (comprising exports and domestic refinery throughput) as a proxy for production for Saudi Arabia and some other OPEC producers. Hence data on the JODI system showing 8.9 mb/d output for Saudi Arabia in July include substantial deliveries into storage. This report would normally account for that extra oil in subsequent months when it is exported. Nonetheless, Saudi supply does appear to be edging higher, despite buyers generally suggesting flat-term volumes for the period through October.

New OPEC Quotas

OPEC says Saudis to assume almost two-thirds of output hike
Platts
Sept. 14, 2007

OPEC kingpin Saudi Arabia will boost its production by 327,000 b/d under
the cartel's output increase announced earlier this week, assuming 63% of the
522,000 b/d OPEC plans to put on the market from November 1, according to
figures released by the group Friday.

The Saudis' new production allocation will be 8.943 million b/d. That is
up from August output of 8.616 million b/d, according to figures from
secondary sources used by the cartel.

OPEC, at its meeting Tuesday in Vienna, said it would raise its actual
production by 500,000 b/d from November, while setting a new output target of
27.253 million b/d.

Cartel officials said the new allocation figures would be altered from
August output numbers from secondary sources, which actually results in a
slightly higher planned output increase of 522,000 b/d.

In raising its production target to 27.253 million b/d from 25.8 million
b/d, OPEC essentially formalized 930,000 b/d of overproduction, on top of
adding the 522,000 b/d in new output.

Not all members will see an increase under the new allocations; figures
for Iran and the United Arab Emirates have decreased. Iraq and Angola are not
part of OPEC's output agreements and are not assigned allocations, though
Angola will join the allocation system next year.

Here are the new allocations for OPEC's 10 members bound by output
agreements, from November 1:

              August     New allocation  Change
              output     from Nov 1
Algeria        1,354       1,357           3
Indonesia        839         865          26
Iran           3,869       3,817         -52
Kuwait         2,446       2,531          85
Libya          1,710       1,712           2
Nigeria        2,145       2,163          18
Qatar            821         828           7
Saudi Arabia   8,616       8,943         327
UAE            2,573       2,567          -6
Venezuela      2,358       2,470         112

Total         26,730      27,253         522
(All figures in '000 barrels/day)

Read more about OPEC in Platts OPEC Guide at
http://www.platts.com/Oil/Resources/News%20Features/opec/index.xml