IEA says OPEC needs to hike Q3 oil output by 900,000 b/d to meet demand

London (Platts)--15May2014/535 am EDT/935 GMT


The International Energy Agency said Thursday OPEC would need to boost its output in the third quarter by some 900,000 b/d from April's level to meet rising global demand, and warned that OECD oil stocks remained tight by historical standards.

In its latest monthly oil market report, the IEA also raised its global oil demand forecast for 2014 by some 65,000 b/d to 92.8 million b/d, but cut its forecast for non-OPEC supply growth.

Global oil supply rose by 700,000 b/d month on month in April to 92.1 million b/d, with roughly half of the increase stemming from OPEC producers, the IEA said.

OPEC output rose by 405,000 b/d to 29.9 million b/d in April, which went "some way" toward easing markets, it said.

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"[But] that gain will be insufficient to meet market needs in the second half of the year, when consumption bounces back seasonally," the IEA warned.

"In order to balance forecast demand, OPEC countries would need to hike third-quarter production by another 900,000 b/d from April levels," it said.

OPEC production has been curtailed in recent months by the fall in production in crisis-hit Libya and security problems in Iraq that have halted northern crude exports.

The IEA said it was unclear whether Libya would be able to keep its ports open and unlock its exports, while Iraq faces "renewed security threats" in the north.

The higher demand estimate had a knock-on impact on the call on OPEC, which represents the amount of crude the oil exporting group would have to pump to balance supply and demand.

The IEA now sees the call on OPEC for the second half of 2014 at 30.7 million b/d, 140,000 b/d higher than it estimated in its previous report.

For the full year 2014, the call was raised by 200,000 b/d to 30 million b/d.

SAUDI OUTPUT RISES, IRANIAN EXPORTS SLIP

Saudi Arabia's crude output averaged 9.66 million b/d in April, up by nearly 100,000 b/d from the previous month, the IEA said, adding that production was expected to rise again.

"Saudi production is expected to increase further in coming months in line with the onset of seasonally higher domestic demand for crude burn at power plants," it said.

Crude burn typically falls to yearly lows of 300,000-325,000 b/d in the first quarter before demand picks up for fuel oil burn at power plants starting in the second quarter, averaging last year between April and September at around 615,000 b/d, it said.

Iranian crude production rose marginally in April by 30,000 b/d to 2.83 million b/d, but estimated import volumes by other countries slid by some 180,000 b/d to 1.11 million b/d compared with March, the IEA said.

Imports of Iranian crude reached a 20-month high of 1.58 million b/d in February but have since edged lower.

Iran's exports in April rose to China by 60,000 b/d to 615,000 b/d, to South Korea by 70,000 b/d to 130,000 b/d and to Turkey by 30,000 b/d to 125,000 b/d.

But Iranian crude exports last month slumped to India by 185,000 b/d to 200,000 b/d and to Japan by 105,000 b/d to just 35,000 b/d, the IEA said.

Iraqi production rose by 140,000 b/d to 3.34 million b/d in April following the start of new production in the south of the country.

NON-OPEC SUPPLY

The IEA also reduced by 100,000 b/d its estimate of non-OPEC oil supply growth for 2014.

"Overall non-OPEC production is now expected to grow by about 1.5 million b/d for 2014 as a whole, roughly 100,000 b/d below last month's forecast," it said.

"The downward revision is due to lower forecasts for Azerbaijan, China, Colombia, Kazakhstan, Mexico and South Sudan, which more than offset upward revisions among a number of producers, including Brazil and Russia," it said.

Total non-OPEC supplies are expected to average 56.1 million b/d in 2014.

Non-OPEC supply fell by about 550,000 b/d in March, amid lower output in nearly every region outside of Latin America, the IEA said.

"Even OECD Americas production edged marginally lower as an increase in the US of roughly 120,000 b/d month-on-month only partially offset declines in Canada (-185,000 b/d) and Mexico (-20,000 b/d)," it said.

Disruptions in Colombia, the Middle East and Africa contributed to the overall drop.

Non-OPEC production is estimated to have recovered somewhat in April, with supplies increasing about 285,000 b/d to 55.8 million b/d.

--Stuart Elliott, stuart.elliott@platts.com
--Edited by Jonathan Dart, jonathan.dart@platts.com

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