|IEA raises oil demand forecast
Demand for oil this year will be slightly higher than expected, the IEA forecast on Thursday, even though a weaker outlook for global economic growth will weigh on consumption.
Oil prices are expected to remain high, and the IEA said that OPEC should raise production sharply to keep world oil markets well supplied in the face of what would be record global demand, AFP reports.
The International Energy Agency raised its forecast by 65,000 barrels per day to 92.8 million barrels, largely because of unexpectedly strong demand in the first quarter, driven by consumption in the US economy.
The agency said that despite a usual easing of demand in April, "crude prices remain elevated'' and said signs indicated there should be a "significant rise in OPEC production from current levels in the second half of the year''.
While the Organization of Petroleum Exporting Countries ``has more than enough capacity'' to raise output, the IEA said the group of the world's top oil producers would be affected by problems that "have plagued some of its member countries recently''.
Unrest in OPEC member Libya, for example, meant that it was unclear whether the country "can keep its ports open and unlock its exports,'' the IEA said.
The agency also pointed to evidence that the world's second-largest economy China may have begun pumping oil into a recently completed expansion of its strategic reserve facilities.
"While that would benefit energy security not just in China but globally, crude exports of that scale might also support oil markets,'' the IEA said.
But it warned: "While OPEC production gains of around 400,000 barrels per day went some ways towards easing markets last month, that gain will be insufficient to meet market needs in the second half of the year, when consumption bounces back seasonally.''
This meant that "in order to balance forecast demand, OPEC countries would need to hike third-quarter production by another 900,000 barrels per day from April levels.''