World Oil Supply Tightening, Demand Increasing; Estimates Revised Upward

IEA (Paris-based), raised oil estimates:

• 2010 (last year): up 2.7 million bopd more than 2009, to 87.7 million bopd
• 2011: 89.1 million bopd

Chinese demand reached a new record high last November at 10.2 million b/d, largely on rising gas oil use, accounting for roughly half of Asia’s increase and for almost a third of total non-OECD growth.

The call for OPEC crude is revised upward for 2011 to 29.9 million b/d from last year’s 29.6 million b/d, and IEA notes that OPEC’s effective spare production capacity has dipped below 5 million b/d for the first time in 2 years. 

In the fourth quarter of 2010, oil markets tightened as demand outweighed supply by 700,000 b/d, IEA said. Recent price strength, notably for international benchmark crude Brent, poses an economic risk, the agency warns, if $100/bbl oil becomes entrenched this year.

And Japan's imports rose 11 percent in November compared to year earlier.