Oil price impact still to come says IEA
Oil price impact still to come says IEA - Economics - Times Online
By Rhys Blakely, Times Online
The International Energy Agency today gave warning that the world economy "has yet to feel the full force of this year’s increase" in oil prices.
The comments came after crude futures hit a fresh record high of $65.14 in New York overnight.
The IEA's monthly report for August said oil prices had risen to historic highs on a "series of supply disruptions, geopolitical issues, and an active hurricane season and strong refiner demand for light sweet crude".
The impact has already been felt on British forecourts, where the price of petrol hit 90p a litre this week and in some regions soared past £1.
The Bank of England yesterday disappointed manufacturers, home owners and retailers, when it signalled that it was unlikely to cut interest rates further in the near term. It cited the high oil price as a contributory factor.
However, the energy watchdog said the world economy "is still largely responding to last year’s rise in price", suggesting that consumers and industry should be prepared for further increases in energy costs.
High prices had so far had only "limited" effect in reducing demand and had not reversed economic growth, the energy watchdog said.
It added that higher oil stocks are needed to calm the markets in the wake of record high prices spurred by security concerns, production outages and continued strong demand.
The agency said stocks held by OECD countries rose to 1.32 million barrels a day in the second quarter of 2005, well above the five-year average of 900,000 barrels a day.
However, it added that "stocks have built rapidly in the first half of 2005, despite $60 oil, but clearly, the market verdict remains more inventories are needed until investment responses catch up and demand patterns are clearer".
In terms of global demand, the IEA held its forecast for growth of overall demand at 1.6 million barrels a day this year and 1.78 million barrels next year, allowing for an easing of apparent demand for oil in China and a small upward adjustment for the United States.
Total demand in the OECD area in the second quarter alone had been revised upwards by 140,000 barrels per day owing to a rise of 100,000 barrels in the OECD Pacific region where Japanese demand growth was unexpectedly strong in June.
A report from Monument Research published earlier this week said market anxiety over the "threat that Islamic militants might strike out in Saudi Arabia" had pushed the oil market to its recent heights.
"If, for any reason, Saudi output were lost, the gap could not be readily filled by supply from other producers," it said.
The report also noted that advances in fuel efficiency had narrowed opportunities for regulating demand through further efficiency drives.
"The balancing mechanism might only work if the oil price were to rise far enough to precipitate a recession in the economy," it said.
By Rhys Blakely, Times Online
The International Energy Agency today gave warning that the world economy "has yet to feel the full force of this year’s increase" in oil prices.
The comments came after crude futures hit a fresh record high of $65.14 in New York overnight.
The IEA's monthly report for August said oil prices had risen to historic highs on a "series of supply disruptions, geopolitical issues, and an active hurricane season and strong refiner demand for light sweet crude".
The impact has already been felt on British forecourts, where the price of petrol hit 90p a litre this week and in some regions soared past £1.
The Bank of England yesterday disappointed manufacturers, home owners and retailers, when it signalled that it was unlikely to cut interest rates further in the near term. It cited the high oil price as a contributory factor.
However, the energy watchdog said the world economy "is still largely responding to last year’s rise in price", suggesting that consumers and industry should be prepared for further increases in energy costs.
High prices had so far had only "limited" effect in reducing demand and had not reversed economic growth, the energy watchdog said.
It added that higher oil stocks are needed to calm the markets in the wake of record high prices spurred by security concerns, production outages and continued strong demand.
The agency said stocks held by OECD countries rose to 1.32 million barrels a day in the second quarter of 2005, well above the five-year average of 900,000 barrels a day.
However, it added that "stocks have built rapidly in the first half of 2005, despite $60 oil, but clearly, the market verdict remains more inventories are needed until investment responses catch up and demand patterns are clearer".
In terms of global demand, the IEA held its forecast for growth of overall demand at 1.6 million barrels a day this year and 1.78 million barrels next year, allowing for an easing of apparent demand for oil in China and a small upward adjustment for the United States.
Total demand in the OECD area in the second quarter alone had been revised upwards by 140,000 barrels per day owing to a rise of 100,000 barrels in the OECD Pacific region where Japanese demand growth was unexpectedly strong in June.
A report from Monument Research published earlier this week said market anxiety over the "threat that Islamic militants might strike out in Saudi Arabia" had pushed the oil market to its recent heights.
"If, for any reason, Saudi output were lost, the gap could not be readily filled by supply from other producers," it said.
The report also noted that advances in fuel efficiency had narrowed opportunities for regulating demand through further efficiency drives.
"The balancing mechanism might only work if the oil price were to rise far enough to precipitate a recession in the economy," it said.
posted by Marcel at 7:23 AM
0 Comments:
Post a Comment
<< Home