|
Opec blames US refineries for gas prices { July 13 2007 } Original Source Link: (May no longer be active)
http://www.ft.com/cms/s/46120380-3115-11dc-891f-0000779fd2ac.htmlhttp://www.ft.com/cms/s/46120380-3115-11dc-891f-0000779fd2ac.html
IEA calls for Opec to increase production
By Javier Blas, Commodities Correspondent, in London
Published: July 13 2007 09:02 | Last updated: July 13 2007 17:55
World oil demand growth will accelerate in 2008 to 2.5 per cent from this year’s 1.8 per cent despite high oil prices, the industrialised countries’ energy watchdog said on Friday.
The International Energy Agency’s forecast comes as Brent oil rose to a fresh 11-month high of $77.60 a barrel , about $1 below the all-time high set last August.
Strong speculative fund buying is contributing to the price increase, with bets on higher oil prices – or long positions – rising to a record high on the New York market. ICE August Brent later traded 90 cents up at $77.30 a barrel.
China, the Middle East and emerging countries would be responsible for two-thirds of the demand increase. Demand growth in the US would slow, while consumption in Europe would accelerate after a slow 2006.
Global oil consumption is forecast to reach 88.2m barrels a day, up 2.2m b/d from 2007. Production from non-Organisation of Petroleum Exporting Countries sources will increase by 1m b/d, with the gap filled by an increase in biofuels and the cartel’s crude oil and gas liquids output.
Chinese demand would rise by 6.1 per cent, to reach the level of 8m b/d. “There is a significant upside risk to this prognosis, notably much stronger-than-expected economic growth,” the IEA said in its monthly oil report.
Some analysts were sceptical of the IEA numbers. “High oil prices would in the end bite the demand,” said Neil Atkinson, of KBC Markets in London.
The energy watchdog said its forecast for demand was based on a price assumption of $68.6 for Brent.
The IEA reiterated that Opec needed to increase its production sharply in the second half of this year to avoid a tight oil market.
Opec has so far rejected calls for a production increase. It blamed US refinery problems, geopolitical instability and speculation on the financial markets for the price increase this week.
Opec, which controls about 43 per cent of global oil production, pumped 30.2m b/d in June, its lowest since June 2004, according to IEA estimates.
The gap between supply and demand would require further Opec production increases. The IEA sees the call on Opec – the need for the cartel to balance the market – rising in 2008 to an average of 32.3m b/d, up from this year’s average of 31.7m b/d. But an increase in Opec total production capacity and refinery flexibility would mean that the market would be “slightly more comfortable” than in 2006 and 2007, said the IEA.
“Investment in upgrading capacity should increase the flexibility of the refining industry to meet demand-side and crude-quality challenges – and may therefore reduce some of these upside price pressures,” the IEA said, noting that the “this increased flexibility starts to kick-in from 2008”.
Copyright The Financial Times Limited 2007
|
|
