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IEA says high oil prices not just speculation PDF Print E-mail
Thursday, 13 March 2008

Agence France-Presse . Paris

Slowing economies in leading countries will moderate thirst for oil but high prices are not the result of speculation alone and are here to stay, the International Energy Agency warned on Tuesday.

The day after after the oil price topped 107 dollars a barrel for the first time, the IEA said: ‘We are in an era of higher oil prices. ‘So if we look at 100 dollars per barrel of oil we have to do so with an understanding that prices are unlikely to return to levels seen in the early part of this decade.’

The IEA said in its monthly report that it was holding its estimate for world oil demand this year at 87.5 million barrels per day ‘with downward pressures from weaker economic growth in the OECD mostly offset by stronger former Soviet Union (FSU) projections.’

This estimate was an increase of 1.7 million barrels per day or 2.0 per cent from demand in 2007 which grew by 1.1 per cent. World supplies of oil rose by 185,000 barrels per day in February to 87.5 million barrels per day but an increase in output by the Organisation of Petroleum Exporting Countries in January had raised the base line of comparison.

However, ‘seasonal limits on OECD production and steady OPEC output may flatten global supply over the next two months.’ Supplies by OPEC had fallen by 120,000 barrels to 32.1 million barrels per day in February.

OPEC’s spare capacity remained at about 2.0 million barrels per day. Growth of overall oil demand in the OECD was expected to come almost solely from demand for fuel from the transportation sector, but even this growth should be weaker than in the past as a result of ‘slowing economic activity, notably in the US, and higher oil prices,’ the IEA said.

Stocks held by industry in advanced countries covered by the Organisation for Economic Cooperation and Development increased by 32.6 million barrels in January to 2.617 billion barrels or 52.9 days of consumption.

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