Oil Supplies Could Fall in Second Quarter on Outages, OPEC Says

The Organization of Petroleum Exporting Countries said global oil stockpiles could drop in the next three months as production outages tighten supplies.

“The market could see a contra-seasonal draw in the second quarter of 2011, if the recent supply disruption were not offset by production increases,” OPEC said in its monthly oil market report today. “Additionally, this draw could be easily accommodated by reportedly high commercial oil inventories across the globe, particularly in the Organization for Economic Cooperation and Development countries.”

Violent clashes in Libya between forces loyal to leader Muammar Qaddafi and anti-government rebels have reduced Libya’s oil exports to “well below” 500,000 barrels a day, according to the Paris-based International Energy Agency. The only reference to Libya in OPEC’s 68-page document, apart from data tables, was in a list of the group’s members where production declined.

Libyan oil production was 1.35 million barrels a day in February, compared with 1.6 million barrels a day in January.

“Events in the Middle East, North Africa region and the associated risk premium have pushed crude oil prices to the highest level since September 2008,” OPEC said.

The group said it has about 6 million barrels a day of spare production capacity and stands ready to act to support market stability.

OPEC forecast it will have to produce 29.8 million barrels a day this year, unchanged from last month’s report. That’s an increase of about 500,000 million barrels a day from last year.

Global oil demand is projected to grow 1.4 million barrels a day in 2011 to 87.8 million barrels a day, little changed from OPEC’s estimate last month.

“Despite the recent unrest, the world economy has continued to enjoy a solid recovery,” OPEC said. “Many uncertainties remain that could slow the current momentum. These include the recent surge in oil prices, which, if sustained for a long period, could impact growth in oil importing countries.”

(Source: http://www.bloomberg.com/news/2011-03-11/oil-supplies-could-fall-in-second-quarter-on-outages-opec-says.html)