Oil prices are still strong as Saudi Arabia vows to keep the market well supplied. It seems that pledge is an acknowledgment from the Saudis that the Iran situation exceeds their worries about an oil glut. Dow Jones reported that Saudi Oil Minister Ali al-Naimi on Wednesday said the kingdom, the world's largest oil exporter, remained ready to cover any shortfalls in crude supply and blamed market speculation for high oil prices. Speculators! Hey, are the Saudis not speculating when they conspire to raise and lower oil production.
Get ready to raise your oil demand estimates. Again the International Energy Agency says refinery runs as reported by Dow Jones will likely rebound in the second quarter compared with the previous year as refineries in China, India and the U.S. commission new capacity, the International Energy Agency said Wednesday in its monthly oil market report, though high oil prices, if sustained, are likely to weigh on refining margins. The IEA said it expected second-quarter refinery runs to grow by 600,000 barrels a day from the previous year to 74.5 million barrels a day.
Bloomberg News reports that, "the International Energy Agency cut forecasts for oil supplies from outside OPEC this year because of lower exports from Sudan and Syria, cautioning that reduced spare output capacity raises the risk of a price surge. Producers not in the Organization of Petroleum Exporting Countries will provide 53.5 million barrels a day this year, or 200,000 a day less than the IEA forecast last month. The agency kept estimates for global oil demand in 2012 unchanged, predicting fuel use will remain “stunted” by the economic slowdown and higher prices. Disappointing non-OPEC output will make the market more reliant on a “slim buffer” of spare production capacity from a few OPEC nations, the IEA said. “A real risk of another year of underperforming non-OPEC supply shines a spotlight once more on OPEC spare capacity,” the Paris-based agency said in its monthly market report today. “Non-OPEC output should recover as 2012 progresses. Until then, the market’s relatively slim ‘buffer’ suggests a bumpy ride in the months ahead.”
Supplies from non-OPEC nations, responsible for about 60 percent of the global total, were cut by 750,000 barrels a day in the first quarter amid fighting in Yemen, outages in the North Sea, sanctions against Syria and the transit dispute between Sudan and south Sudan. That leaves customers more dependent on OPEC’s effective spare capacity, which at 2.75 million barrels is close to levels that can cause a “sustained rise” in prices, the agency said. The figure excludes Iraq, Nigeria, Libya and Venezuela.