Aug. 11 (Bloomberg) -- The International Energy Agency, an adviser to 26 oil-consuming countries, cut its forecasts for supply from Russia and other non-OPEC countries, placing further strain on supplies from the producer group.

The agency lowered its 2005 non-OPEC supply forecast by about 200,000 barrels a day, prompted by unscheduled stoppages in the U.S. Gulf of Mexico, Norway and U.K., and the 2006 estimate by 400,000 barrels a day. It also cut a projection for world demand this year, in part because of revisions to historical U.S. data.

Oil prices reached a record $65.30 a barrel in New York today because of U.S. refinery disruptions and concern about political stability in the Middle East. Saudi Arabia and the rest of the Organization of Petroleum Exporting Countries are pumping near their limits to build inventories for the end of this year.

``For Saudi Arabia and other OPEC producers, spare capacity is the one real tool for price control that they possess,'' the Paris-based agency said in its report today. ``For now however, OPEC producers aside from Saudi Arabia have little market influence as their spare capacity has been almost exhausted.''

This year's world oil demand growth was left ``largely unchanged'' at 2 percent, or 1.6 million barrels a day, while the actual 2005 demand estimate was lowered by 150,000 barrels a day from a month ago, to 83.7 million barrels a day, mainly because of historical changes to U.S. demand, the IEA said.

The IEA said record oil prices above $60 a barrel have done little to dent economic or world oil demand growth so far.

``Higher oil prices have not completely choked off oil demand growth,'' the IEA report said. ``The world economy is still largely responding to last year's rise in price, and has yet to feel the full force of this year's increase.''

China

Oil demand is still growing faster in China than in the U.S. or Europe, and the Asian country's oil demand is expected to rise 4.9 percent in 2005 to 6.75 million barrels a day, and 7.5 percent in 2006, the IEA said. China's economic boom last year led the biggest growth in world oil demand in a quarter-century.

The IEA said preliminary data shows China's apparent oil demand growth was weaker than initially expected in June and ``market reports suggest that it is not likely to post a strong recovery in July or August.''

``There is also evidence of a deceleration in actual consumption, notably in fuel oil, where increases in coal and hydro power are helping to limit the need for relatively expensive fuel oil imports,'' the agency said.

Global oil use will reach 85.9 million barrels a day in the fourth quarter of this year, the IEA said, meaning OPEC will need to pump 29.2 million barrels of crude a day in the final quarter. That fourth-quarter demand for OPEC oil, the so-called ``call on OPEC,'' was revised up by 300,000 barrels a day from its previous report.

OPEC Production

Crude production by all 11 OPEC members rose 285,000 barrels a day last month to 29.6 million barrels daily, led by the United Arab Emirates, Saudi Arabia, Iran and Iraq, the IEA said.

Compared with other forecasters, the IEA typically has lower numbers for OPEC crude oil production, and the call on OPEC, because it has smaller figures for Venezuelan crude, by excluding certain heavy oils.

OPEC agreed on June 15 to raise its official output target for 10 of its members to 28 million, on July 1. The group's president, Sheikh Ahmad Fahd al-Sabah, was authorized to begin talks on a further 500,000 barrel-a-day boost if he thought it was needed.

Those 10 members were pumping 28.3 million barrels of crude a day, and all 11 members 30.4 million barrels a day, Sheikh Ahmad, who is also Kuwait's oil minister, said in a statement two days ago.

``OPEC continues to monitor the market carefully and has observed with concern the recent rising trend in oil prices,'' he said, blaming the gain on refinery outages and political tensions. OPEC, which meets next on Sept. 19, has about 2 million barrels a day of spare production capacity, according to the group's president.

Big Oil Benefits

Swelled by rising oil profits, Exxon Mobil Corp., BP Plc and Royal Dutch Shell Plc are now three of the world's five largest publicly traded companies, when ranked by market value. General Electric Co. and Microsoft Corp. are the other two.

Saudi Arabia, the biggest oil-exporting nation, will generate some $150 billion in oil sales this year, a third more than last year, according to a U.S. government forecast.

An energy policy bill signed by U.S. President George W. Bush this week failed to raise fuel economy standards for cars and light trucks. The bill, passed after four years wrangling, includes $14.5 billion in tax breaks for energy producers over 10 years and a tax credit for people who buy fuel-efficient vehicles.

Refinery Concern

U.S. oil refiners have been forced to make at least a dozen unplanned shutdowns in the past month, bolstering oil prices at a time of peak summer gasoline consumption.

``Because demand boomed so much they have been pushing refineries to maximum capacity for about a year now,'' making plants vulnerable to shutdowns, Deborah White, an energy economist at Societe Generale SA in Paris, said yesterday.

Early signs of increased oil-company investment spending have not dispelled the view that ``oil companies have switched from a position of just-in-time inventory to one of just-in-time capacity,'' the IEA report said.

Oil industry stockpiles in Organization for Economic Cooperation and Development nations equaled 54 days of demand in June, unchanged from May and 2 days more than a year earlier, the agency said.

New York crude oil futures for the remaining delivery months of this year, next year and 2007 all traded above $60 yesterday, showing that buyers and sellers currently expect prices to stay high for months.

The IEA doesn't make price forecasts. The U.S. Energy Department's forecasting arm earlier this week said U.S. crude oil prices will average about $55 a barrel this year and retail gasoline $2.32 a gallon this quarter.

To contact the reporter on this story: Stephen Voss in London sev@bloomberg.net

Last Updated: August 11, 2005 04:02 EDT