IEA SEES OIL MARKET STILL MAINTAINING BALANCE

World oil supply/demand is currently in a manageable balance, although there is little spare crude oil productive capacity, says International Energy Agency. Geoffrey Chipperfield, U.K. chairman of IEA's governing board, said the situation was little changed from the end of November market report that showed a world oil supply outside centrally planned economies of 53.8 million b/d. This is the highest level since May and 600,000 b/d more than in October.

Dec. 17, 1990

2 min read

World oil supply/demand is currently in a manageable balance, although there is little spare crude oil productive capacity, says International Energy Agency.

Geoffrey Chipperfield, U.K. chairman of IEA's governing board, said the situation was little changed from the end of November market report that showed a world oil supply outside centrally planned economies of 53.8 million b/d.

This is the highest level since May and 600,000 b/d more than in October.

SUPPLY/DEMAND

Production from the Organization of Petroleum Exporting Countries increased to 22.9 million b/d in November from 22.3 million b/d in October because of a 400,000 b/d rise each in Saudi production to 8.2 million b/d and Iranian output to 3.3 million b/d.

IEA sees oil consumption falling in fourth quarter because of higher oil prices, the economic slowdown, and a generally slow advent of winter.

"Some incremental output, particularly heavier sour grades of oil, is having difficulty in attracting buyers," it added.

Although tightness in refining eased in recent weeks, IEA said industrial accidents, prolonged cold weather, or other disruptions during the winter could still lead to serious problems in the market.

STOCKS SITUATION

Discussing the stock situation in OECD countries, IEA pointed out that inventories of the main heating fuels are currently more than adequate to meet expected demand this winter.

So far, it added, the relatively high level of heavy fuel oil stocks in major refining countries has not directly restricted refining operations except in isolated instances. An unmanageable excess may be avoided if there is a seasonal pickup in heavy fuel oil deliveries.

Commercial stock behavior in the coming months, IEA noted, would be highly dependent on such unpredictable elements as the weather and price expectations.

Normally the IEA expects a stockdraw of 700,000 b/d in Organization for Economic Cooperation & Development commercial stocks in the fourth quarter and a greater drawdown in the first quarter.

Noting a marked reduction in Soviet exports of crude oil and products, especially gas oil, to almost all destinations, IEA said the drop to about 1.4 million b/d in October and early November from 1.7 million b/d in the first 9 months of the year was more than a seasonal decline.

Instead, the decline was due to falling Soviet production, IEA said.