IEA says world well supplied with oil

Global oil demand is poised to be depressed for the next 18 months while supply levels from OPEC countries are at fairly comfortable levels, the West's energy agency said on Wednesday as it faces calls for an emergency stocks release.

Sources have told Reuters the United States is considering an emergency stocks release in a move to help suppress high oil prices, and other members of the International Energy Agency, such as France and Great Britain, could join the move.

Some members of the IEA have opposed the release although its head has recently said high oil prices were a cause for concern.

The IEA, which represents developed energy consuming countries, made only one mention of "market rumors of an imminent release of U.S. strategic stocks" in its monthly report while painting a supply-demand picture implying such a release would not be necessary.

The IEA said it made no significant changes to its global oil demand outlook and forecast it would grow at a steady rate of around 0.8 million barrels per day (bpd) or 0.9 percent in both 2012 and 2013.

"This modest growth rate reflects the combined effects of sluggish global economic activity, historically elevated oil prices and global improvements in energy efficiency," it said.

It said that August OPEC liquids production growth, led by Nigeria, Angola and Iraq, failed to offset fully unplanned production outages in non‐OPEC countries such as U.S. output hit by a hurricane and North Sea output disruptions due to a strike in Norway and planned maintenances.

However, compared to a year ago, global oil production stands 2.0 million bpd higher due to increases from OPEC, which is pumping way above the levels required by the market and therefore contributing to a large stocks build across the world.

The IEA said the call on OPEC crude and stock change was projected to rise by 1.3 million bpd in the third quarter of 2012 to 31.1 million bpd due to a seasonal quarter-on‐quarter uptick in demand of 1.4 million bpd.

However, a projected recovery in non‐OPEC supplies in the fourth quarter of 2012 is forecast to cut back the ‘call' on OPEC by a substantial 0.5 million bpd to just 30.6 million bpd versus its current output of 31.55 million bpd.

TIGHTENING THE SANCTIONS

Oil prices have rallied to $117 a barrel in August due to expectations of a new round of monetary easing in the United States and amid tensions between Iran and the West over Tehran's nuclear program.

The IEA said Iranian oil exports are estimated to have inched up in August to 1.1 million bpd from below 1 million bpd in July.

"China, South Korea, India and others are poised to increase liftings in September. In addition, a cargo was reportedly sold through the private sector after Tehran, in a bid to maintain exports, allowed for the first time sales outside of the state oil company," the IEA said.

Increased exports, however, may be temporary, it added as both U.S. and European officials have proposed to tighten sanctions further due to lack of progress in negotiations with Tehran over its nuclear program.

On the stocks front, OECD industry crude stocks contracted by 16.5 million barrels in July and a preliminary 23.7 million barrels in August on strong refining crude runs.

Total industry oil builds of 10.6 million barrels for July were below normal and preliminary data hint at counter‐seasonal draws in August, the IEA added.

"Recent demand strength notwithstanding, low expectations of future demand are such that the OECD stock cushion actually looks more comfortable today when measured in days of forward demand than before the latest draws," the IEA added.