Watchdog cuts oil supply forecast

Global oil supplies will grow more slowly than expected over the next five years, the International Energy Agency (IEA) has predicted.

Spare capacity in the world system would fall to "minimal levels" in 2013 amid rising demand from developing countries and supply problems, it said.

As a result the IEA cut its supply forecast by 2.7 million barrels per day (bpd) to 95.33 million bpd.

US crude rose following the report and closed at $140.97 a barrel in New York.

In recent days, crude oil prices have pushed to record levels near $144, driven by supply concerns and strong demand in the Middle East and Asia.

Market constraints

Rising demand from developing countries and ongoing supply problems would be the main factors limiting capacity, the energy adviser said in its Medium Term Oil Market Report.

"Structural demand growth in developing countries and ongoing supply constraints continue to paint a tight market picture over the medium term," the IEA report said.

The Paris-based group warned that declining output at maturing oilfields, as well as delays and cost overruns at new sites would lead to lower-than-expected growth in supplies.

Waning reserves among the members of oil production cartel Opec likely to add to the problems, the energy watchdog said.

While consumption would rise by an average of 1.6% a year - or 1.5 million bpd on average - until 2013, supply growth would drop to 1 million bpd from 2010.

US light, sweet crude for August delivery settled up 97 cents at $140.97 a barrel while London Brent rose 84 cents to settle at $140.67 a barrel.

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