Global oil demand this year might not be as high as earlier thought, according to one leading crude-markets tracker. Going into this spring, the International Energy Agency (IEA) reduced its 2006 global demand growth estimate for crude from an earlier 1.78 million barrels per day to 1.49 million daily barrels-a drop of nearly 300,000 barrels. The Paris-based IEA, which acts as energy policy advisor for 26 member countries around the world, expects global oil demand to average 84.74 million barrels per day in 2006, a gain of only 1.8% over 2005 levels. At the same time, the IEA also reduced its 2006 non-OPEC oil-supply forecast by 110,000 barrels per day, to 51.29 million barrels. Thus, it would appear that the supply/demand gap is narrowing and that the projected "call on OPEC" oil has peaked. However, the cartel's ability to the fill the estimated call on its output remains in question as geopolitical concerns continue to dominate oil-trading activity. "We are more concerned about OPEC's ability to maintain output at required levels for second-half 2006 in view of serious production issues in countries like Iraq, Nigeria, Venezuela and Iran," says Adam Sieminski, chief energy economist for Deutsche Bank in New York. For more on this, see the May issue of Oil and Gas Investor. For a subscription, call 713-260-6441.

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