In its current Oil Market Report, the International Energy Agency (IEA) kept its 2007 world oil demand forecast virtually unchanged, with a 1.8% increase in demand in 2007 to 86 million barrels per day (mbpd), up from 84.5 mbpd in 2006.
Weather-related adjustments to OECD data in Europe and the Pacific were largely offset by US demand strength and upward changes to China, the Former Soviet Union (FSU) and India, acording to the agency.
Falling US product stocks were offset partially by unusually warm weather in Europe and Northeast Asia, but further OPEC cuts in February prevented the normal seasonal crude stock build in the OECD.
Total OECD inventories fell 8.6 mb in January as a crude draw in Europe outweighed a weather-induced product build, leaving forward demand cover broadly flat at 54 days. Preliminary data show the US driving a 65.7 mb fall in February stocks in key OECD countries—or an average 1.2 mbpd decline in the first two months of 2007.
World oil output fell by 65 kbpd in February to 85.5 mbpd amid OPEC supply cuts. Non-OPEC supply additions for 2007 remain at 1.1 mbpd, extending the growth evident since mid-2006. OPEC gas liquids add a further 0.2 mb/d this year.
Sizeable supply risks remain, the IEA cautioned, not least those from underinvestment caused by intensifying resource nationalism.
OPEC February crude supply averaged 30.2 mbpd, down 125 kbpd from January as a 365 kbpd cut from OPEC-10 was partly offset by increases from Iraq and Angola, and leaves OPEC supply within the possible 2Q-range for the call.
OPEC cuts since September amount to 1.0 mbpd, leaving effective spare capacity at 2.8 mbpd. In addition, outages in early March brought the offline total in Nigeria to 0.8 mbpd.