Huge drop in oil stockpiles

LONDON - OIL stocks in consumer nations suffered the biggest first-quarter drop in a decade and may fall further in the coming months, the International Energy Agency (IEA) said, keeping the heat under crude prices.

In its April monthly report released yesterday, the adviser to 26 industrialised countries also shaved its 2007 world oil demand forecast by 250,000 barrels per day (bpd) to 85.8 million bpd, though it left growth in oil use unchanged.

Oil inventories are falling as supply cuts by the Organisation of Petroleum Exporting Countries (Opec) kick in. Lower stocks have helped boost US crude prices to US$62 a barrel from below US$50 in mid-January.

'There has been a sharp draw on stocks in the first quarter,' Mr Lawrence Eagles, head of the IEA's oil industry and markets division, told Reuters. 'It's clearly had a tightening impact and we think it's going to carry on having a tightening impact on the market.'

REUTERS