Oil Prices Fall, IEA Revises Fuel Stocks

Fri June 13, 2003 07:24 AM ET LONDON (<a href=asia.reuters.com>Reuters) - World oil prices fell on Friday after the West's energy watchdog, the International Energy Agency (IEA) made an unprecedented upwards revision to its oil inventory data, although it said stock levels were still low.

Benchmark Brent crude LCOc1 fell 38 cents to $27.45 a barrel, while U.S. light crude CLc1 fell 46 cents to $31.05.

Analysts said that fundamentally the situation was still bullish, with crude stocks in the United States more than 12 percent lower than a year ago and the peak demand U.S. driving season well under way.

"Obviously the IEA news is fairly bearish," said Paul Bednarczyk, analyst at 4CAST. "But I should imagine it's not going to make a huge difference in the longer term. The concentration is on U.S. stocks."

On Friday, the IEA said it had made an unprecedented 79 million-barrel upwards revision to its oil inventory data for the industry stocks in the Organization for Economic Cooperation and Development (OECD) at the end of March.

The agency said the timing of the revision was unfortunate, given that the world oil market was seeking direction after the U.S.-led war on Iraq, but that it did not change its view that global markets were tight, especially for gasoline.

"The magnitude of the stock revisions does little to ease the tight U.S. gasoline situation heading into the peak summer driving season," the IEA said in its monthly oil market report.

"The increase in crude stocks may, however, signal some relief for an otherwise tighter heating oil situation later this year."

The IEA also said that the Organization of the Petroleum Exporting Countries produced 26.43 million barrels per day (bpd) in May, 220,000 bpd more than in April.

The increase was due to the continuing recovery of production in Venezuela and Nigeria where production was crippled earlier this year by strikes and ethnic clashes, and also due to higher Iraqi output.

Iraq on Thursday awarded its first crude sell tender after the war to sell 10 million barrels of oil from storage. Senior oil executives said they were still targeting one million bpd exports in July.

The IEA said Iraq's latest crude export targets looked overly ambitious, given the state of production facilities and the security situation in the country.

OPEC ministers at a meeting in Qatar this week decided to leave their official output ceiling unchanged at 25.4 million bpd, but would meet again on July 31 to reconsider production levels in case the return of Iraqi shipments undermined prices.