Stocks news boosts demand hopes

26 July 2002

A fall in US energy stocks in the week ending 19 July has boosted hopes of an increase in oil demand during the US driving season, when motorists traditionally consume high quantities of gasoline. The Energy Information Administration reported on 24 July falls of 600,000 barrels in gasoline stocks, 200,000 barrels in distillate stocks and 300,000 barrels in jet fuels, as well as a sharp 3.7 million-barrel decline in crude oil stocks.

The figures gave an immediate boost to the market, adding about $0.30 to a barrel. The OPEC basket price on 24 July was valued at $24.98 a barrel, well within the organisation's target price range of $22-28 a barrel. OPEC in late June agreed to roll over its production quotas in order to maintain oil market stability.

However, compliance has been weak this year, with June output estimated to be 1.3 million barrels a day (b/d) higher than the quota of 21.7 million b/d. The organisation also faces problems in the form of non-OPEC production increases. The end of export curtailments by Norway, Russia and Mexico will release an extra 150,000 b/d into the market over the next six months, while organic growth also remains high.

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