OPEC to carry heavier 2006 burden

The International Energy Agency's monthly Oil Market Report today decreased its 2006 outlook for non-OPEC supply growth by 100,000 barrels per day or 8 percent. The report highlighted the recent rise in crude oil prices due to Nigerian outages and uncertainties about Iran's nuclear program, which

will support high crude oil prices. Crude oil prices rose more than $1 this morning to top $65 after the report.As a consequence Amerada Hess, Occidental Petroleum, and Chevron are industry sector favorites to leverage earnings from high oil prices.The IEA's 2006 demand forecast is largely unchanged with 2.2 percent growth forecast of 1.8 million bpd, based on a rebound in Chinese demand growth and more robust U.S. demand growth versus a hurricane-affected 2005. The IEA lowered its 2005 demand growth 1.3 percent from 1.2 million bpd to 1.1 million bpd due. Over the past five years, global crude oil demand has grown an average of 1.7 percent per year. Data released by the Chinese government Monday implied global crude oil demand did not increase in 2005, compared with the IEA's 3 percent rise estimate, so the accuracy of the data is in question. The IEA lowered its non-OPEC global crude oil supply growth forecast owing to a slower recovery in the Gulf of Mexico and expectations for lower non-OECD Asia and Latin America production growth. Government representatives met in London Monday to discuss whether to convene an extraordinary meeting of the International Atomic Energy Agency regarding Iran or to send the matter directly to the United Nations Security Council for possible sanctions. OPEC reliance remains high. The IEA raised the amount of crude oil the cartel will need to produce to balance global supply and demand by 100,0000 bpd to 28.6 million bpd, which is below recent levels. Inventories fell slightly. Global OECD crude oil and refined product industry inventories for November fell 11 million barrels and were 52 days of forward demand cover, one day above the five-year historical average.