Organisation of Petroleum Exporting countries increases its global supply estimates by 160,000 barrels a day.
Asian demand fuels a rise in OPEC oil forecasts
OPEC has raised its estimate for the amount of oil the world will need this year on the basis of surging Asian demand.
The organisation of 12 oil-exporting nations now expects it will need to supply 29.4 million barrels per day (bpd) of crude on average this year to cover global demand, 160,000 bpd more than it forecast last month. Crude inventories remained "adequate" to meet current demand, however, while the group still had almost 6 million bpd of idle capacity to call upon, it said.
"The magnitude and speed of the world economic recovery will have a remarkable impact on world oil demand this year," OPEC said in its latest monthly oil market report. "Expectations for a sustained improvement, particularly in key emerging economies such as China and India, will continue to influence oil market direction."
The International Energy Agency (IEA), which advises industrialised countries on energy issues, has warned that oil prices may be entering a "danger zone" that could endanger global economic recovery.
"The current price level is alarming. OPEC must continue to be alarmed about the future," Nobuo Tanaka, the executive director of the agency, said yesterday on the sidelines of the World Future Energy Summit in Abu Dhabi.
"We think the market is potentially getting tighter," he added.
OPEC, however, maintains that the market remains adequately supplied and crude's recent rise towards US$100 a barrel has been largely due to market speculation.
"The recent surge in prices cannot be fully explained by a change in oil market fundamentals as global stocks point to a continued well-supplied market," the group's secretariat said in the report.
"Demand for OPEC crude in the first half of the year will be lower than current OPEC production of 29.2 million bpd, which would result in a growing stock cushion," the group added.
The 11 members of OPEC subject to production quotas raised their combined output last month, which resulted in just 54 per cent compliance with the record output cut they agreed to in December 2008. OPEC has not changed its quotas since then, and has indicated it does not consider the recent strong rally in crude prices as sufficient reason to convene an extraordinary meeting ahead of the regular meeting scheduled for June.
"The increase in oil prices toward $100 is not worrisome enough to warrant a call for an emergency meeting," said Masoud Mir-Kazemi, the OPEC president who is also Iran'soil minister. "None of the OPEC members considers this figure as being unreasonable."