Global tension, Chinese demand to keep oil markets on edge: IEA

PARIS, Oct 11, 2006 (AFP) – Oil prices have fallen because of stockbuilding and slowing demand but a possible OPEC output cut, global instability and growth in China and the Middle East are likely to keep the market under tension, the IEA said Wednesday. The International Energy Agency forecast an increase of 1.2 percent in global oil demand this year to 84.6 million barrels per day and a 1.7-percent rise in 2007 to 86.0 million barrels per day.

High crude prices, relatively mild weather and competition from natural gas were factors in a fall of 0.2 percent in demand for oil products in OECD countries.

However, “non-OECD growth is still robust, driven by China and the Middle East”, the IEA said in its latest Oil Market Report.

So, although crude prices have fallen by about 18 dollars a barrel from a high point of more than 78 dollars in early August, “they remain historically high in both nominal and real terms”.

In September, crude oil supply from OPEC countries fell by 155,000 barrels per day (bpd) to 29.8 million, with Saudi Arabia, Iran and Nigeria cutting output.

The Organization of Petroleum Exporting Countries is currently mulling a production decrease of one million bpd, which the IEA said “would raise effective spare capacity