KUALA LUMPUR, June 8 (Reuters) - The International Energy Agency (IEA) expects OECD oil stocks to fall to 57 days by year-end from the current 63 days, if OPEC's production continues at current levels, along with the recovery in demand.
"If economic and demand recovery comes back as we have been projecting and also if oil production by OPEC continues at current levels, we project a decline in stock levels towards the end of the year to normal levels -- four- to-five-year average cover of 57 days," IEA's head Nobuo Tanaka told Reuters at a sidelines of an industry conference.
"Now it's 63 days for the OECD stocks level," he said.
Analysts said the general rule has been that 50 days of forward cover is mega bullish for oil prices, 53 days is bullish, 57 days bearish and 60 days mega bearish.
Saudi Oil Minister Ali al-Naimi has said that if stocks are only going to fall to 57 days, the implication is that OPEC may do nothing regardless of what happens to the price, adding that he wants to see world stocks at 52-54 days.
Tanaka said the direction of prices are always determined by fundamentals and speculation just amplifies the volatility.
"This is probably a turning point (in the demand recovery) or we are very close to it," he said.
"If prices moved like this, it could be that recovery has already happened but the speed (of the oil price rally) is very fast, we have to watch very carefully."
U.S. crude