Sharp upward revision in world oil stocks briefly pushes July oil futures below $30

Gary Park, Petroleum News Calgary correspondent

The International Energy Agency rattled world oil markets June 13 by pumping another 78.8 million barrels into its global inventory, raising the total to 2.44 billion barrels.

The findings, based on high U.S. crude runs, briefly pushed July contracts on the New York Mercantile Exchange below $30 a barrel.

But the Paris-based agency said commercial stocks in the 30 industrialized member countries belonging to the Organization for Economic Cooperation and Development were still close to five-year lows entering May.

The IEA said its revisions “do little to ease the tight U.S. gasoline situation heading into the peak summer driving season.

“The message remains the same: OECD commercial stocks are low and need to build in advance of peak demand,” the report said.

World oil demand for 2003 remains unchanged at 77.9 million barrels per day, but economic recovery should add another 1 million barrels per day later in the year, the IEA said.

On the supply side, the IEA reported that OPEC output in May was 26.43 million barrels per day, with Iraq, Nigeria and Venezuela — all hit by disruptions — boosting production by 150,000 to 200,000 barrels per day.

It said Iraqi volumes are now at 750,000 barrels per day, but projections of a doubling by mid-year are “overly ambitious.”

Estimates of non-OPEC supplies for the third quarter are 50.3 million barrels per day.

Matthew Simmons, president of investment bank Simmons & Co., told economists in Prague this month that OPEC holds “all the future supply cards,” although Mideast growth may be limited.

He also questioned assumptions that non-conventional oil will meet world demand for decades, noting that heavy oil needs “remarkable amounts of energy to convert into usable energy.”