April 13 (Bloomberg) -- The International Energy Agency bolstered its 2010 supply outlook for countries outside the Organization of Petroleum Exporting Countries as production rose in Canada, the U.K. and Russia.
Non-OPEC producers, accounting for about 60 percent of the world’s supplies, will raise output by 600,000 barrels per day this year to average 52 million barrels a day, the IEA said in its monthly market report today. That’s 220,000 barrels a day more than estimated last month. The agency left its forecast for global oil demand in 2010 little changed, 30,000 barrels a day higher than in last month’s report.
“Non-OPEC prospects are looking brighter,” the Paris- based adviser to 28 countries said in the report. “Upstream investment decisions made before both 2008’s price surge and slump are starting to bear fruit. New upstream projects are coming online and ramping-up production.”
Crude-oil prices have extended last year’s rebound on growing confidence that the economic recovery will stimulate fuel demand, with futures reaching an 18-month high of $87.09 a barrel in New York on April 6.
The revised forecast for non-OPEC supply is being driven by increases of about 65,000 barrels a day in Canada, the U.K. and Russia. The IEA also made smaller increases of about 20,000 to 35,000 barrels per day to its estimates for the Republic of Congo, Malaysia and Colombia.
“Russia in particular continues to show steady growth due to ramp-up at new fields, as well as increased drilling at existing fields, amid more favourable prices and key tax breaks,” the IEA said. “The U.K. too has seen ramp-up at new fields and relatively robust performance in general.”
‘Call-on-OPEC’
As a result, the IEA lowered its demand estimate for crude from the Organization of Petroleum Exporting Countries, known as the “call-on-OPEC,” by 200,000 barrels day. OPEC will need to provide an average of 28.8 million barrels a day this year in order to balance supply and demand, according to the agency.
The 11 OPEC members bound by the organization’s quota system increased production in March by 30,000 barrels a day to 26.7 million a day, the IEA said. That means the group’s compliance with record output cuts announced in late 2008 slipped to 55 percent last month from 56 percent in February.
The IEA increased its estimate for worldwide crude consumption this year by 30,000 barrels a day to 86.6 million a day, equating to growth of 1.7 million barrels a day, or 2 percent, from last year. The adjustment is driven by higher- than-expected demand from North America and the Asia-Pacific region, the IEA said.
“Underlying concerns remain that oil markets are overheated,” the agency said. “Ultimately, things might turn messy for producers if $80 to $100 a barrel is merely seen as the new $60 - $80, stunting economic recovery while prompting resurgent non-oil and non-OPEC supply investment.”
--Editors: Raj Rajendran, Steve Voss.
To contact the reporter on this story: Grant Smith in London at gsmith52@bloomberg.net
To contact the editor responsible for this story: Stephen Voss at sev@bloomberg.net
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