London: Rising Opec production and comfortable oil stocks in developed economies should limit a further spike in oil prices despite demand hitting an all-time high this year, the West’s energy watchdog said on Thursday.
The International Energy Agency, which advises 28 industrialised countries on energy policy, said in its monthly report Opec’s production rose by 280,000 barrels per day to a two-year high of 29.85 million bpd in January from December mainly thanks to higher Iraqi output.
“We are seeing a little more oil from Opec as they’re seeing the same indicators on the demand side, especially in Asia, that we are. A flexible attitude from Opec is a good thing,” said David Fyfe, head of the IEA’s oil industry and markets division, in an interview with Reuters.
“The fact that prices have gone up from around $75 in September to $95 a barrel and above is because of a sharp tightening in the physical market,” he said.
“It’s not the only thing driving prices but some of the impetus comes from that market tightening. We saw very strong 2010 oil demand growth and we’re feeding that through into 2011, he said.
The IEA said it raised slightly its 2011 oil demand growth forecast by 50,000 bpd to 1.46 million bpd.
Although growth would be nearly half of the unexpectedly strong growth in 2010, the world oil demand will surpass 90 million barrels per day in late 2011 for the first time.
The IEA said OECD oil stocks fell to a two-year low equal to 57.5 days of demand in December from 58.3 days in November but were still comfortable.
“A cushion of stocks and spare capacity does provide some potential to constrain further price increases in 2011,” it said.