Opec says spare oil capacity okay; raises demand forecast

May 17 | Updated: May 18 2006, 05:30am hrs
Opec, which pumps 40% of the worlds oil, said the groups spare production capacity will be sufficient to allow inventories to rise and said bottlenecks in the refining industry are keeping prices high. World demand will average 84.6 million barrels a day this year, the Organisation of Petroleum Exporting Countries said on Wednesday in a monthly report. Thats 100,000 barrels a day more than its previous estimate.

Opecs spare output capacity would equal at least 3 million barrels a day should its members produce about 30 million barrels a day this year, the OPEC Secretariat in Vienna wrote in the e-mailed statement. At 10%, this should be sufficient as it is in line with the last 15-year average.

New York crude oil futures were trading at about $70 a barrel on Wednesday after reaching a record $75.35 on April 21. This years 15% gain has been spurred by export-losses in Nigeria and tensions surrounding a nuclear program in Iran, the Middle Easts second-largest crude producer. Limited spare capacity in crude oil production and oil-refining worldwide has also underpinned prices, traders and analysts say. World oil consumption will increase by 1.38 million barrels a day, or 1.65% this year, Opec said.

Crude oil production from the 11 Opec members rose 164,100 barrels a day last month to 29.8 million barrels a day, according to the average of several secondary sources monitored by the group, including news agencies and independent analysts, the report said.