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| Oversupplied oil market to rebalance by next year, says IEA | Oversupplied oil market to rebalance by next year, says IEA |
| (4 months later) | |
| The International Energy Agency (IEA) said it expects the oversupplied oil market to rebalance by next year, as non-Opec production records its biggest decline in a generation. | The International Energy Agency (IEA) said it expects the oversupplied oil market to rebalance by next year, as non-Opec production records its biggest decline in a generation. |
| An oil glut has prompted a slump in crude prices from a peak of $115 (£80) a barrel in June 2014, but the IEA executive director, Fatih Birol, said on Thursday that production outside tOpec would fall sharply this year, by almost 700,000 barrels a day. He expects oil markets, and prices, to rebalance at the turn of this year, or by 2017 at the latest. | An oil glut has prompted a slump in crude prices from a peak of $115 (£80) a barrel in June 2014, but the IEA executive director, Fatih Birol, said on Thursday that production outside tOpec would fall sharply this year, by almost 700,000 barrels a day. He expects oil markets, and prices, to rebalance at the turn of this year, or by 2017 at the latest. |
| Brent crude, the global benchmark, increased to $45.92 a barrel, up 0.2% on the day, in early London trading. US crude recovered to $44.30, up 0.4% on the day. | Brent crude, the global benchmark, increased to $45.92 a barrel, up 0.2% on the day, in early London trading. US crude recovered to $44.30, up 0.4% on the day. |
| Birol said low oil prices had led to investment cuts of 40% over the past two years, especially in the US, Canada, Latin America and Russia. | Birol said low oil prices had led to investment cuts of 40% over the past two years, especially in the US, Canada, Latin America and Russia. |
| After meeting Japan’s prime minister, Shinzō Abe, Birol told reporters in Tokyo: “This year, we are expecting the biggest decline in non-Opec oil supply in the last 25 years, almost 700,000 barrels per day. At the same time, global demand growth is in a hectic pace, led by India, China and other emerging countries.” | After meeting Japan’s prime minister, Shinzō Abe, Birol told reporters in Tokyo: “This year, we are expecting the biggest decline in non-Opec oil supply in the last 25 years, almost 700,000 barrels per day. At the same time, global demand growth is in a hectic pace, led by India, China and other emerging countries.” |
| He added: “When we look at all the fundamentals – demand, supply and stocks – I have all the reasons to believe that in the absence of a major economic downturn we are going to see balance in the markets latest by 2017.” | He added: “When we look at all the fundamentals – demand, supply and stocks – I have all the reasons to believe that in the absence of a major economic downturn we are going to see balance in the markets latest by 2017.” |
| Birol argued that conditions remained difficult for shale oil producers, despite a recovery in Brent oil prices to above $45 a barrel. “I think $45 is a bit of a relief for all the oil producers around the world, but this is still far lower than to make the entire shale oil production profitable for the United States.” | Birol argued that conditions remained difficult for shale oil producers, despite a recovery in Brent oil prices to above $45 a barrel. “I think $45 is a bit of a relief for all the oil producers around the world, but this is still far lower than to make the entire shale oil production profitable for the United States.” |
| However, Iran is determined to claw back market share after western sanctions were lifted in January, and reiterated plans to reach an output of 4m barrels a day. Saudi Arabia and Russia are also looking to pump more oil. Just days after a global deal to freeze production levels collapsed, Russia’s energy minister said the country might raise oil output to historic highs of more than 12m barrels a day. | However, Iran is determined to claw back market share after western sanctions were lifted in January, and reiterated plans to reach an output of 4m barrels a day. Saudi Arabia and Russia are also looking to pump more oil. Just days after a global deal to freeze production levels collapsed, Russia’s energy minister said the country might raise oil output to historic highs of more than 12m barrels a day. |
| A lot now hinges on US oil producers. At the moment, global producers are pumping between 1m and 2m more barrels every day than is needed. | A lot now hinges on US oil producers. At the moment, global producers are pumping between 1m and 2m more barrels every day than is needed. |
| Analysts at the French bank BNP Paribas said: “Any hope of market rebalancing from the current surplus in supply [lies] on the predicted decline in US oil production. The US accounts for the bulk of non-Opec’s 2016 oil supply contraction of 700,000 barrels per day forecast. If the decline in the US oil supply proves insufficient to tighten balances, then ... the oil price will remain low.” | Analysts at the French bank BNP Paribas said: “Any hope of market rebalancing from the current surplus in supply [lies] on the predicted decline in US oil production. The US accounts for the bulk of non-Opec’s 2016 oil supply contraction of 700,000 barrels per day forecast. If the decline in the US oil supply proves insufficient to tighten balances, then ... the oil price will remain low.” |
| Meanwhile, analysts at Bernstein Research said: “Optimism has returned to energy markets, at least for now.” Bernstein believes US shale oil would have a “clear future” if oil prices rose to $50-$60. | Meanwhile, analysts at Bernstein Research said: “Optimism has returned to energy markets, at least for now.” Bernstein believes US shale oil would have a “clear future” if oil prices rose to $50-$60. |