Bloomberg also reported, "The International Energy Agency raised its forecast for global oil demand growth to 1.3 percent annually over the next five years on economic expansion in China, cautioning that gains in prices threaten the recovery. Consumption will increase to 95.3 million barrels a day in2016 from 88 million barrels a day in 2010, with China accounting for about 41 percent of the gain, the Paris-based adviser to oil-consuming nations said in its Medium-Term Oil Market Report today. Crude prices are "weighing" on the developed nations that make up the Organization for Cooperation and Development, the agency said." "The resilience of emerging economies, which navigated relatively unscathed through the rough waters of the Great Recession of 2008 to 2009, will likely alter the balance of global economic power," the IEA said. "Prices around $100 are weighing down an already-fragile macroeconomic and financial situation in the OECD." Global oil consumption will increase 1.2 million barrels a day, or 1.3 percent, annually over the next five years, the IEA said. That's 700,000 a day more than the agency's last forecast for 2010 to 2015 in December and will leave a "fairly thin" cushion of spare production capacity, it predicted. "This expected rise in demand will be the consequence of sustained economic growth," concentrated in Asia, the Middle East and Latin America, according to the IEA.
But it is OPEC to the rescue. Bloomberg reports, "The Organization of Petroleum Exporting Countries boosted crude production in May as Saudi Arabia pumped 9 million barrels a day, according to the Paris- based International Energy Agency. Daily production from the 11 OPEC members bound by quotas was 26.50 million barrels a day last month, the IEA said in its monthly report. That implies a compliance rate of 61 percent, compared with a revised 63 percent in April, when output was 26.38 million barrels a day. "There is a clear need for the organization to boost supply as refining operations ramp up to help meet peak summer season demand," the IEA said. "There have been reassuring signs that Saudi Arabia and some other producers will rise to the challenge in the months ahead to help fill the gap left by the ongoing absence of Libyan supplies." Libya's output declined to 100,000 barrels a day as armed conflict curtailed exports. The country produced an average 1.6 million barrels a day in January. OPEC's members including Iraq pumped 29.18 million barrels a day in May, an increase of 210,000 barrels a day from 28.97 million in April. "Saudi Arabia, Nigeria, Kuwait and Iraq offset lower United Arab Emirates and Angolan output," the IEA said. The group's spare capacity stands at 4 million barrels a day, according to the IEA.
OPEC, provider of about 40 percent of the world's crude, couldn't agree at its June 8 meeting in Vienna on new production targets. The group set its biggest-ever supply cuts in late 2008 amid a collapse in global demand. The decision capped production at 24.845 million barrels a day for all members except Iraq, which is exempt from the quota system. Compliance percentages are based on combined output from the 11 members that committed to reduce from a base production rate in September 2008 of 29.045 million barrels a day.
Phil Flynn is senior energy analyst for PFGBest Research and a Fox Business Network contributor. He can be reached at (800) 935-6487 or at email@example.com.