IEA: crude oil stocks tight in developed countries

The Associated Press

Oil stocks in developed countries dropped below the five-year average in November, with heavy consumption in Japan and the United States leading a trend which pushed crude prices higher, the International Energy Agency said Jan. 16.

U.S. crude stocks continued to fall in early January, dropping 6 million barrels below the notional minimum operating level of 270 million barrels, the agency said in its monthly Oil Market Report.

“Colder weather in the U.S., surging natural gas prices, strong economic growth and robust Asian product demand supported (higher) prices,” the report said.

OPEC production increased by 195,000 barrels per day in December to boost daily output to 27.9 million barrels, the highest level since March 2001, the Paris-based IEA said.

Total OPEC crude supply averaged 27.6 million barrels per day in November, up 255,000 barrels per day from October — largely on the strength of an increase of 320,000 barrels a day in Iraq.

Exports from Basra in southern Iraq reached 1.55 million barrels per day.

“The estimate of OPEC’s November output suggests a collective decision to ignore the new production target while prices are high,” the IEA said.

“The 4 December decision to leave targets unchanged until a mid-February meeting suggests that the producer group intends to meet winter demand, while retaining sufficient flexibility to constrain supplies should prices fall. Higher-than-expected November output bolstered flat non-OPEC supply growth and helped to moderate price gains, but some of the supply potential was constrained by Russian Black Sea shipping delays.

“Looking forward, there appears to be little growth in non-OPEC supply through to the end of the first quarter, while Iraqi export growth appears to be limited due to infrastructure constraints,” the report said.

Crude oil futures dropped nearly 3 percent on the New York Mercantile Exchange Jan. 15, after trading as high as US$35.41 overnight. Traders attributed the drop in part to profit-taking, and also to a U.S. report this week which showed that stocks of refined products remain above five-year averages despite the tight crude supply.