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Asian Petroleum Review : Jan-March 2011
An oil glut that has weighed on prices for two years is dissipating, with U.S. stock- piles falling their fastest in over a decade this autumn, crude being whisked ashore from storage at sea, and China running refineries near full bore to replenish diesel supplies. Oil stocks are still well above levels that pre- ceded a 2008 price surge to $147 a barrel, but a massive oil surplus accrued during the global economic downturn is being burned off. That could leave oil prices - - now trading near $81 a barrel after they fell from two-year highs above $88 this month - - more vulnerable to up- ward surges. Oil plummeted to $33 as recently as last year as inventories soared, even after the Organization of the Petroleum Exporting Countries cut output targets by 4.2 million barrels a day (bpd) in late 2008, the most in the cartel's 50-year history. As OPEC keeps a tighter lid on production, world demand is recovering faster than most forecasters, including OPEC itself, had expected. Daily oil demand this year should break a previ- ous record set in 2007, analysts say. "Earlier we heard people say it could take five years to return to record demand levels, " said Jan Stuart, global oil economist at Macquarie in New York. "But we have reached them again and are sur- passing them. " Runaway growth in China has helped, with re- cession-wary U.S. consumers still using less fuel than in 2007. Emerging markets make up about 80 percent of new demand, but stocks are declining in slower- growing OECD countries too. In top oil consumer the United States, total crude and oil product stocks have fallen by 38 million barrels since mid-September, the biggest autumn drop since 1999. U.S. stocks at 1.1 billion barrels as of Nov. 19 were 9.3 percent higher than in the same week of 2008, just months after oil prices peaked. But stocks are down 3.3 percent since reaching an all-time high this September, government data shows. Global oil inventories fell 76 million barrels since August and the oil market is in a seasonally- adjusted deficit of 1.3 million barrels a day, Gold- man Sachs analysts wrote on Monday. Unrelenting Chinese demand has thrust Asian refiners into competition for crude, allowing Saudi Arabia to increase the premiums it charges on eastbound cargoes for next month. Global oil glut burns off as demand recovers By Joshua Schneyer and Alejandro Barbajosa NEW YORK/SINGAPORE