Jumps in oil prices, which led some countries to withdraw crude from stockpiles earlier this year, are less likely as economic growth slows and Libyan fields resume output, said David Fyfe, the head of the International Energy Agency's oil-industry and markets division.
“There is not the same potential for economically damaging spikes in price in the fourth quarter that we saw in the third quarter,” he told reporters today during the agency’s annual ministerial meeting in Paris.
Member states of the Organization of Petroleum Exporting Countries pumped less oil in September as Saudi Arabia cut its production from a 30-year high in August and Nigeria’s output was hindered by sabotage attacks, the IEA said earlier this month. Oil traded near the highest price in more than a month today after Goldman Sachs Group Inc. cited “upside” potential, countering forecasts for rising U.S. inventories.
“There is a market in the fourth quarter through 2012 for a bit more than OPEC is currently producing,” Fyfe said. “Prices remain at a pretty elevated level.”
Crude for November delivery was at $88.67 a barrel, up 0.4 percent, in electronic trading on the New York Mercantile Exchange at 11:02 a.m. London time. Brent oil for December settlement was at $111.09 a barrel, down 0.05 percent, on the London-based ICE Futures Europe exchange.
Demand for crude from OPEC is about 30.6 million barrels a day, which is closer to OPEC production than when IEA members voted earlier this year to release stocks in a bid to counter higher prices, Fyfe said.
Growth in demand of about 1 million barrels a day through 2016 “is a big ask” for oil companies and will need large projects to come onstream and continued investment, even in a potential economic decline, he said.
Libyan output could rise to about 1 million barrels a day by the end of next year while demand growth could “largely be wiped out next year” should there be a double dip recession, Fyfe said. “The risks of further price spikes has been mitigated for the time being.”