“No Sustained Balance For Oil Market Until 2017” – IEA

The International Energy Agency, IEA, has said the global oil market will not find a sustained balance until 2017 year despite outages and rising demand that have so far helped to curtail supply glut.

Revealing  its first forecast for 2017 in its monthly oil market report, the world’s leading energy body said although it expected supply and demand to even out in the latter half of 2016, it forecast a small surplus early next year.

OPEC supplies are forecast to increase modestly, while production outside of the group, including in the US, resumes its growth trajectory. This would make way for a slight increase in global stocks in the first half of 2017, before they begin to fall again.

In the short-term, however, “less oil has been stockpiled than we originally expected,” IEA.

 The oil overhang, which it initially estimated would stand at 1.5million barrels a day in the first six months of this year, has dipped to 800,000 b/d.

This has stoked a price rally, taking the international benchmark Brent crude to above $50 a barrel.

Oil demand growth has been significantly stronger than forecast, while global supply disruptions from outages in Nigeria to Canada have taken hold. A steady decline in US oil production and a weaker US dollar have also bolstered prices.

Demand growth in the first quarter has been better than expected, leading the IEA to upwardly revise its estimates for the first three months of the year by 400,000 b/d and its 2016 figure to 1.3m b/d.

The IEA expects the same level of demand growth for 2017. Total demand will increase from 96.1m b/d this year to 97.4m b/d next year.