The International Energy Agency increased on Thursday its estimate of global demand for oil this year by 470,000 barrels per day to a total of 81.1 million bpd owing particularly to strong first-quarter demand in India and Brazil.
Demand for oil would probably total 81.1 mbd this year from 78.7 million bpd last year and 77.0 mbd in 2002, the agency said.
On stocks, the agency said: "OECD industry oil stocks closed April at 2.473 billion barrels, up 9.0 million barrels and ending 29 million barrels above last year.
"While the OECD's crude stock position has improved, products remain tight and forward demand cover remains depressed for a third month at 51 days."
The 10 members of the Organisation of Petroleum Exporting Countries, excluding Iraq, increased their supplies of crude oil in May by 680,000 bpd to 26.1 million.
The IEA recalled that at a meeting in Beirut last week OPEC decided to increase its official target for production by 2.0 million bpd to 25.5 million bpd from July 1 and by 500,000 barrels more from August 1.
However, the IEA commented that the amount of oil actually provided by OPEC in June was likely to exceed the May production figure.
Production by Iraq fell by 210,00 barrels per day in May to 2.1 million bpd because exports had been disrupted, the IEA said. This meant that total production by OPEC rose by 470,000 bpd in May.
Production by non-OPEC countries was steady. Overall oil production throughout the world rose by 460,000 bpd to 82.0 million bpd.
Increases of output by Russia and in Africa had offset a fall of production in the OECD area.
The IEA disagreed with sceptics who have argued that OPEC had agreed only to increase official production quotas by stages to a level corresponding to estimated current production and that OPEC producers would have difficulty in increasing real output.
The IEA declared: "There are those who question the ability of key producers to increase supply, suggesting that no fresh oil will enter the market as the result of the Amsterdam and Beirut agreements.
"The IEA does not fall into this camp. We take the commitments of these producers seriously, and are convinced that countries such as Saudi Arabia can easily produce 9.1 million barrels and beyond."
Saying that OPEC producers had made "a show of good faith", the agency said: "We support the view that Saudi Arabia can surge production above 10.0 million barrels per day. Sustaining this level over 90 days, however, requires some observable reconfiguration of infrastructure and a further commitment to drilling."
The agency also listed some of the reasons why oil prices had risen to a peak above 42.0 dollars a barrel on June 1 and argued that they would not last.
"Producers recognise that current oil prices are too high and that oil prices risk undermining economic development, and oil demand, especially in developing nations.
"While the pace of economic growth remains strong, it has been driven by a number of one-off factors including low interest rate policies and stimulative tax cuts, major infrastructure projects in China, depleted industrial inventories and expenditures associated with the war on terrorism.
"In this respect, price effects have been overwhelmed by wealth effects. This cannot last, and the move to add physical barrels constitutes a responsible action on the art of producers to help stabilise the market."
-- AFP