London, January 20: Red-hot oil prices sizzled near nine-year highs on Thursday as the West's energy watchdog warned that Opec supply curbs will leave the world perilously short of oil in coming months. World benchmark Brent for March delivery was up 16 cents at $26 a barrel by 1120 GMT, near the $26.30 nine-year high struck briefly on Wednesday.Forecasts of a long spell of cold weather in the huge US market has triggered even faster price rises there, moving at one point late on Wednesday within 35 cents of the $30 mark.
Fresh gains followed a warning from the International Energy Agency (IEA) that global inventories slid again in November and December to take stocks of spare oil in industrialised countries to record lows.
"The market needs more oil now," the Paris-based group said on Thursday in its Monthly Oil Market Report. Continued producer restraint would create a global supply shortfall of two million to three million barrels per day (bpd) in the first quarter of this year and one million to 1.5 million in the second, the IEA said.
"Additional drawdowns become exceedingly difficult," the Paris-based agency said. "If stocks to meet that shortfall are not available some demand will go unmet," it added.
Yet the falling stockpiles-especially in the US-have not deterred many Opec members from signalling that they favour keeping supply limits beyond a scheduled end March expiry. A group of Opec ministers last week recommended that course of action be approved when the group meets to set policy on March 27. Last week Saudi Arabian oil Minister Ali al-Naimi said that if market conditions remained as they were, he saw no need to change the output policy, possibly even for the whole of 2000.
Opec has managed to revive prices from historic lows just a year ago by showing few signs of cheating on the self-imposed 4.32 million bpd supply curbs agreed in March 1999. The producer group held compliance with pledged output cuts at 78 percent in December, only a little down from 81 percent in November, the IEA report said.
Bullish sentiment has been nurtured by forecasts that the US Northeast, the world's biggest heating oil market, is likely to remain in the grip of a cold snap for another 10 days at least. US energy secretary Bill Richards on expressed concern on Tuesday over this year's fresh spurt higher in crude oil and heating oil markets.
He plans to raise the issue of prices when he meets oil ministers of major US Petroleum suppliers including Saudi Arabia later this month.
-- (Reuters)
Copyright © 2000 Indian Express Newspapers (Bombay) Ltd.