LONDON: Global markets urgently need extra oil as refinery demand is about to rise, the West’s energy watchdog said on Friday in another bid to press OPEC to push up oil production at a meeting next week.
"There is a need for more oil in the market, and we hope producing countries are reading the market signals in the way we are," Fatih Birol, chief economist for the International Energy Agency (IEA), told Reuters on Friday.
"We are already seeing the impact of high oil prices in the U.S. and China," he said, adding that US economic data was showing slower growth rates while inflationary pressure in China was on the rise.
OPEC is considering raising oil supply targets for the first time since 2007 to prevent prices from soaring further, and sources said that the most likely outcome would be for a rise of 1 million bpd.
But traders said that such an increase would have a soothing effect on oil prices only if it meant a rise of a million bpd above current production levels, and not just an increase above OPEC’s targets set over two years ago.
The 11 members bound by OPEC production targets — all except Iraq — pumped 26.23 million bpd in May, nearly 1.4 million bpd above their 24.84 million bpd target.
Total world oil demand is expected to rise from 88.21 million bpd in the current quarter to 89.91 million bpd in the third quarter and to 90.16 million bpd in the last quarter of 2011, according to the IEA’s latest figures.
Birol said global refinery demand will grow by 3-3.5 million barrels a day by next quarter as refiners ramp up activity to meet seasonally higher oil product demand reflecting factors including the resumption of the driving season in the United States.
An ongoing drought in China is also likely lead to increased use of diesel generators, he said.
