The oil market is no stranger to conflicting price signals, and the current period of relatively calm prices is a case in point.

The ongoing standoff between Russia and the West has so far caused only a relatively small, and short-lived rise in crude prices, despite the huge importance of oil trade between Russia and Europe, in particular.

If you want to know why the reaction was not bigger, you might want to take a look at the latest monthly report from the International Energy Agency, which has some very interesting data in it.

Most notably, February witnessed a big jump in global oil supply, which rose by more than 600,000 b/d from January to reach 92.87 million b/d.

The main reason for the increase was not the latest evidence of the onshore oil boom in the US, but Iraq. Despite ongoing political problems and instability in the country, it managed to boost production to 3.62 million b/d in February, up more than 500,000 b/d from the previous month and marking its highest level since 1979.

It remains to be seen if this increase can be sustained, but it clearly reflects a measure of success in Iraq’s efforts to boost both production and export infrastructure capacity in the south of the country; Basrah Light exports from the Persian Gulf leaped by 470,000 b/d to 2.51 million b/d last month, the IEA estimated. Tankers could load at two offshore single point moorings simultaneously for the first time.

With such a big injection of Iraqi crude, total OPEC supply last month jumped by around 500,000 b/d to reach 30.49 million b/d, breaking the 30 million b/d mark for the first time in five months.

In addition to this, there was also a smaller (about 100,000 b/d) amount of new crude from non-OPEC, namely North America, although the rate of growth there was lower than it has been of late as cold weather in the US Midcontinent and Texas hampered production activity.

All of this extra oil may go some way to help explaining the apparent equanimity which the market has so far demonstrated to the Ukraine crisis, and also offsets the warnings the IEA has been sounding about low stock levels in OECD countries.

After a big stock draw in the fourth quarter of last year the agency said inventories fell again in January. Although the 13.2 million barrel draw was relatively modest in size, it was unusual for the time of year (the first January stock draw for at least six years), and reflected a noticeable drop in heating fuel stocks as a result of the cold weather in the US and Canada.

With the end of the northern hemisphere now firmly in sight (despite low temperatures in parts of the US again this week), rising supply and the prospect of refinery maintenance in the second quarter could give the market additional breathing space.

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On the flip side, the IEA revised upward its estimate of world oil demand in 2014 once again amid an improving economic picture.

The latest upward revision of 80,000 b/d leaves the full-year demand estimate at 92.68 million b/d, an increase of 1.35 million b/d on 2013.

This was the seventh consecutive upgrade to the IEA’s demand forecast, and brings the total upward revision to 700,000 b/d. Right now demand growth is relatively muted, but the IEA said it was expected to gather pace later in the year.

It is worth bearing in mind, though, that demand is still being outpaced by non-OPEC supply, which is expected to rise by 1.7 million b/d this year because of what the IEA called the “relentless growth in US and Canadian supplies,” with smaller increases also expected in Russia, China and Brazil.

This effectively reduces the call on OPEC crude — the amount of crude the oil cartel would have to pump in order to balance supply and demand — to an average of 29.7 million b/d in 2014. This is well below current production, even without accounting for further increases from Iraq, a possible recovery in Libyan production or the potential lifting of sanctions against Iran. If any of those events come to pass, there would be even more oil available to ease any market pressures.

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