Oil supply falls to 5-year lows as demand picks up

Global oil supply levels fell to five-year lows in January, as demand rallied in developed countries of the OECD, prompting a firming in oil prices in mid-month, the International Energy Agency (IEA) said Thursday. Brent futures were last trade at USD 109.25/bbl while Western Texas Intermediate (WTI) traded at USD 101.25, also reflecting colder weather and expected seasonal maintenance. The IEA said in its latest Oil Market Report (OMR) that global supply fell almost 300,000 b/d to 92.1 million b/d in January, mainly due to falls in non-OPEC output. But the Agency remarked that supply levels are still 1.5 mb/d higher than a year earlier at this period. Thus the IEA said that its forecast for supply growth in 2014 remained unchanged at 1.7 mb/d. OPEC output in January rose a marginal 85,000 b/d to 29.99 mb/d, with a decline in Iraqi production offset by a rise in output in Libya. The report also said that oil demand growth rebounded in the second half of 2013, when demand growth is now estimated to be 1.2 mb/d. More tham 90 percent of this growth came from non-industrialised countries outside the OECD area. The IEA said demand growth in 2014 should be 1.3 mb/d, almost all of which will come from the emerging economies. "Demand growth is expected to accelerate in 2014 in line with the broader economy," the report said, nonetheless. The OMR also noted that OECD industry stocks have plummeted by another 56.8 million barrels, dropping to 2.56 billion barrels. The 1.5 mb/d fourth quarter stock draw was the largest quarterly decline in oil reserves since the end of 1999.