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IEA slashes non-OPEC oil supply forecast due to lower-than-expected production rise in Azerbaijan

16 January 2010 16:10 (UTC +04:00)

Non-OPEC producers, accounting for about 60 percent of the global total, will provide 51.5 million barrels a day in 2010, or 150,000 barrels a day less than previously estimated, the Paris-based adviser to 28 nations said in its monthly report on Friday. Supplies from outside OPEC will climb by 200,000 barrels a day next near compared with 2009. Production from Azerbaijanâ€™s Azeri-Chirag-Guneshli field was cut by a gas leak in 2008.

â€œAzerbaijan is the entire story in terms of non-OPEC changes,â€ David Fyfe, head of the IEAâ€™s oil industry and markets unit, said by phone. â€œWe still see Azeri production rising this year, but not as sharply as before as facilities damaged in 2008 may not get back to capacity before the incident.â€

OPEC will need to pump more to balance demand and supply, according to the IEA. It raised its estimate for the so-called call on OPEC crude for 2010 to 29.1 million barrels a day, from the 29 million barrels a day estimated last month.

The IEA left its forecast for 2010 global oil demand unchanged at 86.3 million barrels a day. Thatâ€™s up 1.7 percent, or 1.44 million barrels a day, from 2009.

Cold Snap

Rising consumption in developing countries such as China will offset weaker demand from economies in the Organization for Economic Cooperation and Development, according to IEA estimates. Itâ€™s â€œprematureâ€ to raise demand estimates because of the cold snap in the Northern Hemisphere, the agency said.

â€œIt remains to be seen whether this winter overall will be much colder on average than last yearâ€™s, which was particularly cold,â€ the agency said. Stronger fuel demand for heating may not mean higher oil consumption because developed economies are switching to natural gas for heating needs, it said.

The IEA estimates that Azerbaijanâ€™s production will still rise in 2010, even as it fails to recover all of the output lost in the September 2008 outage. The country will pump 1.2 million barrels a day in 2010, compared with 1.1 million barrels a day last year, according to the agencyâ€™s forecast.

Norway, Brazil

Higher than expected supplies from Norway and Brazil will offset weaker Canadian and Malaysian output in 2010, according to the IEA. Norway expects crude production to fall 6 percent this year, the countryâ€™s Petroleum Directorate said on Friday.

OPEC, which agreed at a meeting in Angola last month to maintain production targets, continued to increase supplies in December, reducing its adherence to output quotas.

OPEC crude output averaged 29.1 million barrels a day last month, 75,000 barrels a day more than in November, according to IEA estimates. The 11 members bound by production quotas boosted supplies by 100,000 barrels a day, meaning compliance with production quotas slipped to 58 percent last month from 60 percent in November, according to the agency.

Industry-held oil stockpiles in OECD countries rose â€œcounter-seasonallyâ€ in November to 2.74 billion barrels, 2 percent higher than a year earlier, the IEA said. Rising stocks in European crude and North American gasoline, accounted for the increase. Stockpiles typically fall in November