Higher oil prices and revised figures showing increased exports from the former Soviet Union prompted the Paris-based International Energy Agency to ramp down its demand projections for crude oil to an average 76.2 million b/d, compared to its May estimate of 76.5 million b/d.
Despite the weaker figure, oil prices remain at $30/bbl as advance purchases by refiners and tight product markets in the US pressure demand. IEA says demand for the second quarter 2000 averaged 74.4 million b/d, down from its earlier forecast of 75.1 million b/d. Fourth quarter demand should rise to 78.4 million b/d, down 300,000 b/d from the May forecast.
The IEA says it doesn't expect members of the Organization of Petroleum Exporting Countries (OPEC) to agree to a production increase at the June 21 in Vienna, but it does expect an "urgent need for a substantial production increase at OPEC's September meeting" fueled by strong economic growth and high crude demand as winter approaches.
The IEA also noted in its June report that supply had risen to 76.9 million b/d, with only moderate increases in OPEC production, mostly from Iraq. A strong inventory build also was recorded, especially in the US, which is supporting oil at the $30 level. Doubts about the durability of Iraqi output also helped keep oil prices up.