By KONSTANTIN ROZHNOV and SARAH KENT
LONDON -- Strong refinery activity should boost
supply of diesel and gasoline through year-end, bringing relief
to hard-pressed consumers, the International Energy Agency said
in a monthly report Wednesday.
But the IEA head of oil industry and markets didn't rule out
a future release from the emergency stockpiles of its 28 member
The Paris-based energy watchdog, which represents major
oil-consumer nations, expects refiners to process around 75.7
million bpd of crude in the third and fourth quarters, 1.3
million bpd more than in the last quarter of 2011.
There is a rebalancing under way. If it continues,
having more product on the market will relieve the very tight
market situation we have and that will be very welcome,
said Antoine Halff, the IEA's editor and head of the oil
industry and markets division.
Behind the third-quarter
output rise is unexpectedly high production in developed
economies, driven by strong refinery profit margins.
But as this high production isn't expected to last, the
expected strong fourth-quarter growth is likely to be driven by
demand and capacity increases in Asia, Africa and the Middle
Fast-expanding emerging economies continue to provide the
biggest share of annual growth in refinery output, the IEA said.
The annual growth, the strongest since the beginning of
2011, isn't exceptional as it is coming from low levels, but it
helps increase low inventories of fuels such as diesel and
gasoline, said Toril Bosoni, a senior oil market analyst at the
However, the pressure on supply will be easier to assuage
for some products than others, the IEA's Mr. Halff said, adding
that supply of distillates like diesel would likely remain
Low stocks of diesel, which is used as heating fuel, could
provoke a spike in prices of the fuel ahead of the northern
hemisphere's winter, analysts have warned.
Futures contracts of high-quality diesel used to fuel cars
have already risen by 25% since the end of June due to rising
oil prices and low inventories.
The energy agency said the oil market picture remained
cloudy, due to conflicting pressure on supply and demand. Given
this, Mr. Halff didn't rule out a release from member
countries' emergency oil reserves.
I dont think we can make a determination at this
stage, Mr. Halff said. Its a very dynamic
market and there are many moving parts; there's concern about
the economy and there's concern about supply, I don't think
there is any room for complacency.
The IEA has in the last month faced calls for a release from
emergency stocks, as historically high oil prices have
increased concern over the impact of energy costs on struggling
economies, particularly in an election year in the US.
Recent comments from the IEA's executive director, Maria van
der Hoeven, emphasized that there is no disruption to supplies
and played down the need for a stock release. In its Wednesday
report, the IEA repeated that supply levels remained fairly
Mr. Halff said the IEA was closely monitoring the market and
keeping in touch with all concerned parties regarding a
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