World oil markets tighten
World oil markets are tightening as Chinese fuel demand increases and Opec supplies fall, draining inventories, the West's main energy agency said today, in a trend that could put extra pressure on prices.
The International Energy Agency, which advises the industrialised nations on energy policies, has in the past few months described the oil markets as very well supplied.
It said it had now a more "sobering, 'morning after' view" although it was probably too early to become seriously worried and declare the start of a new market cycle or a return to the bull market.
"All of a sudden, the market looks tighter than we thought," the IEA said. "OECD inventories are getting tighter - a clean break from the protracted and often counter-seasonal builds that had been a hallmark of 2012"
However, the IEA said that both Chinese demand and Saudi supply were too complex for hasty interpretations.
"The dip in Saudi supply, for one, seems less driven by price considerations than by the weather," it said.
"A dip in air conditioning demand - as well as reduced demand from refineries undergoing seasonal maintenance - likely goes a long way towards explaining reduced output. Nothing for the global market to worry about," the IEA said.
Opec crude supply in December fell to its lowest level in a year at 30.65 million barrels per day on lower output from Saudi Arabia and Iraq.
The IEA raised its call on Opec crude and stock for 2013 by 100,000 bpd, to 30 million bpd, still below the current production.
It also said China's recent economic indicators have signalled the potential for a rebound in oil consumption after a slowdown in spectacular growth in 2012.
The IEA said it raised its forecast for the global oil consumption for 2013 by 240,000 bpd to 90.8 million bpd, some 930,000 or 1 per cent higher that in 2012.
Non-Opec production is projected to rise by 980,000 bpd to 54.3 million bpd, the highest growth rate since 2010.