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Mon 15 Nov 2010 12:19 PM

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Oil market 'very well supplied' - IEA

International Energy Agency sees 5 million barrels per day saved if fuel subsidies are eliminated

Oil market 'very well supplied' - IEA
(Bloomberg Images)

The oil market will have plenty of

supply until at least the end of 2011 if OPEC keeps producing at

current levels, International Energy Agency Executive Director

Nobuo Tanaka said on Monday.

There have been concerns about supply after recent sharp

falls in crude and other oil products in floating storage due to

robust demand.

"We think if OPEC continues production at the current level,

the oil market will be very well supplied towards the end of next

year," Tanaka told Reuters in an interview in Tokyo.

The IEA has revised up its 2010 oil demand growth forecast by

190,000 barrels per day to 2.34 million barrels per day on the

back of demand from China as well as the building up of heating

oil stocks in Europe ahead of winter. But it said global oil

demand will slow in 2011 to 1.19 million bpd.

"There are certain uncertainties about the global economy, so

we still maintain the low growth scenario," Tanaka said.

He added that he thinks that the impact of United States'

latest round of quantitative easing has already been factored

into the crude market.

The IEA last week called for eradicating fossil fuel

subsidies, which would boost the global economy, environment and

energy security.

"There should be a better way for helping poor people rather

than undermining the energy markets," he said.

"We know by phasing out subsidies, yes, it helps reduce

demand of the global energy markets by about 5 million barrels

per day."

Fossil fuel subsidies are on course to reach $600bn by

2015 if no action is taken, he said. The IEA has estimated that

such subsidies were $312bn in 2009.

G20 leaders committed in Pittsburgh in 2009 to phase out,

over the medium-term, inefficient fossil fuel subsidies which

encourage wasteful consumption.

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