Vol. 5 Num 694 Sat. May 13, 2006  

Global Oil Demand
IEA cuts forecast for '06

The International Energy Agency (IEA) lowered on Friday its forecast for global oil demand this year and said an increase in Iraqi exports had helped boost worldwide production in April.

Citing mild temperatures in the first quarter and the impact of high prices on consumption, the IEA revised down its estimate of average daily demand this year to 84.8 million barrels, representing an increase of 1.5 percent from 2005, but less than a previous forecast of 85.1 million barrels.

On the supply side, the IEA said that production had increased by 485,000 barrels per day in April from March to a total 85.1 million barrels per day, in part because Iraqi and Nigerian exports had increased during the month.

"A 215,000-barrels-per-day increase from Iraq was augmented by lesser increases from Nigeria, Venezuela, Libya and Qatar," the report said.

The comments about increasing supply and slower-than-expected growth in demand were set against a backdrop of surging oil prices.

Traders are focused on the possible impact of a conflict between oil-producing Iran and the United States, and also worry about a production shortfall amid increasing global demand.

The report offered evidence to soothe the latter worry, but concern over instability and the lack of spare production capacity in the global system, which could offer a safety cushion in the event of disruption in Iran, is expected to continue to force prices higher.

Oil prices fell in New York and London on Friday, partly on news of the IEA report, traders said.