The International Energy Agency Friday said the amount of unused oil in industrialized nations neared a record high as of July, the most recent month for data available, indicating that crude prices are likely to remain trading at comfortable levels for consumers for some time.
The International Energy Agency Friday said the amount of unused oil in
industrialized nations neared a record high as of July, the most recent month
for data available, indicating that crude prices are likely to remain trading
at comfortable levels for consumers for some time.
Bolstering that prospect, the Paris-based agency, in its monthly oil market
report, also cautioned that global oil demand was expected to ease in the
months ahead due to the sluggish pace of economic recovery.
"We do see oil demand slowing in the second half globally," said
David Fyfe, editor of the agency's oil market report. He added that the IEA,
which serves as an energy advisor to mostly industrialized nations, saw
"an amply supplied [world] oil market until at least 2011," although
that timeline could stretch even farther out if the global economy
deteriorates.
Oil inventory in July in the U.S. and other industrialized nations--which
collectively comprise about 53% of world demand--stood at 61.4 days of what is
known as forward demand cover, a metric that gives a general flavor of the
health of oil consumption and the amount of supply in storage facilities.
That is approaching a record hit in August 1998, the IEA said, and compares
with an average level of around 55 days seen earlier this decade. Preliminary
data indicate a fifth straight monthly increase in oil inventory in August, it
said.
The growth in world crude demand this year was basically kept unchanged at 1.9
million barrels a day versus the IEA's August report, with total consumption
seen at 86.6 million barrels a day, or 2.2% above 2009. But that projected
increase is expected to ease considerably next year to growth of just 1.5%.
A key reason for that call is less stellar oil consumption in
China
, the
biggest driver of the growth in world crude demand. Consumption there for 2011
is expected to increase by 4.3%, representing a downward revision from 4.6% in
August. The latest estimate represents just half of the growth the IEA expects
this year in China, the world's second biggest oil consumer after the U.S.
Still, despite that bearish indicator, crude prices remain entrenched in a
trading range of $70-80 a barrel, a level that has held firm the past year as
prices have often been driven by equity markets and other non-oil fundamental
factors.
Friday, front-month light, sweet crude futures for delivery in October traded
at $75.72 a barrel at 0835 GMT, up $1.47 a barrel in the Globex electronic
session.
Fyfe said the IEA's forecasts on Chinese oil demand were bound to be revised up
or down in the months ahead because
China
's
state economic bureau had recently said it was making revisions to historical
oil consumption data going back several years.
The Organization of Petroleum Exporting Countries' expects world oil demand
growth at just about half the level the IEA is forecasting, underlining the
cartel's downbeat assessment of state of the world crude market.
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