|Crude prices have increased some 18% since March.|
In its current Oil Market Report, the International Energy Agency increased its estimate of growth in OPEC oil production by 250 thousand barrels per day (kbpd). But the agency then cut its view of non-OPEC supply growth by 205 kbpd, leaving world oil supply at 84.7 million barrels per day (mbpd).
Production outages in North America and the North Sea accounted for most of the shortfall in non-OPEC supply growth. Russia is also pumping less than expected. Furthermore, the IEA cut its non-OPEC production estimate for 2006 by 400 kbpd to 52 mbpd.
The decrease in non-OPEC supply clearly puts more pressure on OPEC—and specifically, Saudi Arabia—to meet demand that continues to grow at a steady pace.
Despite some revisions in historical data, the IEA maintained its estimate for growth in oil demand in 2005 at 1.6 mbpd (approximately 2%), and nudged it slightly upward to 1.78 mbpd in 2006 from last month’s estimate of 1.75 mbpd. The continuing rise in prices, in other words, has not significantly affected global demand.
Benchmark oil prices climbed above $65 per barrel in response to the news about non-OPEC production, decreasing gasoline inventories in the US, and concern over future OPEC production.
|Gasoline demand is up 3% year-on-year.|
In the meantime, gasoline demand in the US continues to grow, according to the EIA, despite ever-increasing prices. For the four weeks ending on 5 Aug 2005, US drivers consumed an average 9.483 million gallons of gasoline per day— up 3% year-on-year from 9.221 million gallons per day.
Diesel demand continues to grow as well, increasing 2% to an average 4.006 million gallons per day up from 3.930 million gallons per day.