Oil supply from non-OPEC countries will grow less than expected in the first quarter this year, the International Energy Agency (IEA) said on Wednesday, leaving its global oil demand growth forecast unchanged.
The agency, which advises industrialized nations on energy policy, said non-OPEC oil production will rise by just 300,000 barrels per day (bpd) in the first quarter, down from 490,000 bpd in previous forecasts as unplanned shut-ins topped 750,000 bpd.
The IEA also downgraded its full year non-OPEC production growth to 730,000 bpd from 900,000 bpd.
Worsening prospects surrounding Syria and South Sudan posed the greatest challenges to non-OPEC supplies.
Also on the supply side, the agency highlighted the erosion of inventories in industrialized nations, adding that although China and other emerging consumers were building new storage capacity, their actual holdings provided less demand cover than those in the OECD.
“Put simply, a post-recession OECD industrial stock overhang has gradually been whittled away. Inventories, notably crude in Europe and the Pacific, look very tight in absolute terms,” the IEA said in the monthly report.
OECD inventories rose by a ‘muted’ 13.6 million barrels in January to 2.61 billion barrels, it said, putting absolute inventory levels below the five-year average for the seventh consecutive month.
Production from the Organization of the Petroleum Exporting Countries which pumps around a third of the world’s oil, rose for the fifth month in a row to highs not seen since October 2008 of 31.42 million bpd led by Saudi output and the Libyan recovery.
Saudi supplies rose during the month to a near-three decade peak of around 10 million bpd, leaving spare capacity at less than 2 million bpd.
“The market’s relatively slim ‘buffer’ suggests a bumpy ride in the months ahead,” the IEA said.
Regarding appetite for oil, the agency kept its estimates broadly unchanged for 2012, seeing growth of about 800,000 bpd.
OPEC also retained its view that world oil demand will grow by 900,000 bpd this year, unchanged from last month.
However, the IEA warned that high oil prices were the main threat to a recovery.
“Demand growth will likely remain stunted by weaker economic prospects, the more so if prices stay high,” the IEA said.
Brent futures have risen by more than 17 per cent since the start of the year to stand just short of $126 a barrel on Wednesday.