IEA cuts its Opec production target as growth in China slows

Despite weaker demand, the IEA said significant supply risks remained, including a deal between Sudan and South Sudan to revive exports and regional tensions arising from the conflict in Syria. AP PhoShow more

The International Energy Agency trimmed its forecast of how much oil Opec will need to pump as growth slows in China and other nations.

The Paris-based watchdog, which represents 28 industrialised countries, cut the call on Opec for the second half of the year by 200,000 barrels per day (bpd) to 29.8 million. Opec's official output ceiling is 30 million bpd, although the group pumped 89,000 bpd in excess of that last month.

Chinese demand growth was trimmed to 3.8 per cent from 3.9 per cent.

"While Europe's economic woes are taking a toll on demand, there are mounting signs that China's oil use, like its economy, may have shifted to a lower gear," the IEA wrote in its monthly report.

The shrunken demand forecast, which is in line with Opec's prediction of "an easing of fundamentals despite higher seasonal demand" later this year, increases the pressure on the organisation to revise its official target in December, when it next meets. Last month it rolled over its quota for a third time and put off decisions on a new secretary general and on reviving individual production targets.

Despite weaker demand, the IEA said significant supply risks remained, including a deal between Sudan and South Sudan to revive exports and regional tensions arising from the conflict in Syria.

Unexpectedly, shale - the bugbear of Opec last month as journalists lobbed question after question at exhausted ministers - merited a mere three mentions in the 15-page report.

In Washington, the US energy information administration upped its estimate of American recoverable shale reserves to 58 billion barrels from 32 billion. It also ranked China number three worldwide, after Russia, with 32 billion barrels.