IEA: Opec must hit target to balance oil market
Increased demand from China is expected to impact on global markets
The International Energy Agency has stated that Opec must pump more oil in 2014 in order to reach its target of 30 million barrels per day and meet rising demand.
According to Reuters, world oil demand growth will be slightly higher than previously thought in 2014, at 1.32 million barrels per day (bpd), the IEA said in its monthly Oil Market Report, offering a more bullish demand outlook than other government forecasters.
Turmoil in producers such as South Sudan and problems at Kazakhstan's Kashagan field and elsewhere saw the West's energy watchdog cut its estimate for non-OPEC supply growth by 100,000 bpd to 1.5 million bpd for the year.
That will result in demand for OPEC crude rising to about 30 million bpd this year, the IEA said, a 200,000 bpd increase on its previous estimate and in line with the exporter group's own output target.
"Crude prices remain elevated and forecast balances call for a significant rise in OPEC production from current levels for the second half of the year," the report said.
"While OPEC has more than enough capacity to deliver, it remains to be seen whether it will manage to overcome the aboveground hurdles that have plagued some of its member countries lately."
Turmoil in Libya and other OPEC members has hampered crude oil supplies in recent years. However, the IEA said the Organization of the Petroleum Exporting Countries (OPEC) produced 29.9 million bpd in April, a monthly increase of 405,000 bpd led by Iraq,Saudi Arabia, Kuwait and Algeria.
The agency, which advises the United States and other industrialised countries on oil policy, said OPEC was expected to keep its output target unchanged when it meets in Vienna on June 11, a level it said would be insufficient in the second half of this year when consumption increases.
"In order to balance forecast demand, OPEC countries would need to hike thirdquarter production by another 900,000 bpd from April levels," it said.
"Whether Libya can keep its ports open and unlock its exports is unclear. Meanwhile, Iraqfaces renewed security threats in the north, while outside OPEC new politicallydriven disruptions have intensified in Colombia and South Sudan."
The IEA said a surge in Chinese imports suggested that the world's number two oil consumer was building its strategic reserves of oil, which could tighten global markets.
OECD commercial stocks rose by 52.1 million barrels in April, trimming their deficit to the five year average, it said, though those inventories remain tight by historical standards.
The Paris-based IEA's projection for oil demand growth comes in above those of the other two main government forecasters.
In its latest report, U.S. Energy Information Administration trimmed its forecast for world oil demand growth this year by 50,000 bpd to 1.18 million bpd.
OPEC estimates 2014 oil demand rising by 1.14 million bpd.