Prospects for higher crude oil prices improved somewhat as the Energy Information Administration (EIA) in Washington and the International Energy Agency (IEA) in Paris issued their monthly market analyses in June. The IEA says global oil demand appears to be pulling out of its slump. "A prolonged contraction in OECD (Organization for Economic Cooperation and Development) demand seems to be ending the second quarter. This slight decline should be offset by growth in non-OECD demand," it reported in its monthly "Oil Market Report." The IEA kept its 2002 worldwide oil-demand growth forecast at 420,000 barrels per day. Reduced worldwide oil demand and a warm winter created a contraseasonal rise in OECD inventories from December to May, the EIA notes. Stocks in the world's leading industrial nations finished May more than 50 million barrels higher than a year earlier and 150 million barrels higher than at the end of May 2000. But it still expects reduced production by OPEC members, continuing reduced exports from Iraq and a demand recovery to become increasingly visible as lower inventories. That should build support for continued strong or rising world oil prices, the EIA reported in its latest "Short-Term Energy Outlook." It expects daily world oil demand to grow by more than 600,000 barrels this year, with a turnaround starting in the third quarter. With an expected economic recovery in 2003, particularly in the U.S. where gross domestic product growth is expected to reach more than 3% annually, daily worldwide oil demand could increase by 1.2 million barrels next year, with half of the increase coming from the U.S., the EIA reports. The reports marked a return to a more stable world oil market outlook from one that was much more uncertain a month earlier, when political instability in the Middle East and Venezuela put a "war premium" on most crude oil exports. Michael Mayer, who follows major oil companies for Prudential Securities Inc., Menlo Park, Calif., said non-OPEC production growth is expected to exceed demand growth through 2003. That would leave OPEC stuck at 77% utilization, a 14-year low. "The last time its utilization rate was lower was in 1988, when it was 71% and prices averaged only $16 per barrel," he says. "But for the high level of Middle East tensions, we believe oil would be in the $20- to $22-per-barrel range."