Oil stocks in industrialized nations may be headed for their biggest fall in more than 10 years as OPEC production cuts bite, the International Energy Agency said on Tuesday, building a case for more OPEC oil.
OPEC ministers have begun arriving in Vienna for a meeting on Thursday to determine output. At its last two meetings the group that pumps over a third of the world's oil agreed to curb supplies by 1.7 million barrels per day, roughly six percent.
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"In reality, stock trends and prices are signalling that higher OPEC exports will be needed in the months ahead," wrote the IEA, adviser to 26 industrialised nations.
Tighter OPEC supplies and a February cold snap in the United States contributed to the decline.
"Preliminary data suggest that OECD stocks have fallen by over 1.26 million bpd over the first two months of the year, and could be heading for the largest first quarter stock draw for over 10 years," the IEA said.
It pinpointed a sizeable supply risk from the resource nationalism that has swept Venezuela, Bolivia and Russia. Greater state control of energy resources and the temptation to siphon off revenues threaten to choke investment, the IEA said.
"Often political and social spending needs grow to the point where oil exploration and development investment is compromised, which can in turn reduce oil and gas exports," the agency said.
At around $59 a barrel, oil is well off its $78.40 record high of last July, but it is still three times the price seen at the start of 2002 when Asian demand kicked in.
The IEA kept its 2007 world oil demand forecast steady at 86 million bpd, up 1.8 percent on 2006.
It estimated oil supplies from the 10 OPEC members bound by output restrictions fell to 26.76 million bpd in February, down 365,000 bpd from January.
All OPEC, including Iraq and Angola, pumped 30.2 million bpd in February, down 125,000 bpd from January.
The IEA put demand for OPEC oil in the range 30.7 million bpd to 31.6 million bpd in 2007.