The world’s production of crude oil is falling behind demand, the International Energy Agency said Thursday.
From July through September, global production of crude oil will lag behind demand by almost 1 million barrels a day, said the IEA, a Paris-based agency that monitors energy trends for oil-consuming nations. And the oversupply of crude is clearing out even as OPEC producers pump at record or near record levels.
“Our balances show essentially no oversupply during the second half of the year,” the IEA’s monthly report said Thursday.
The prediction eliminates a central truth of the oil market for the past two years, when oil prices collapsed because of a flood of new crude supplies from places like the U.S. and Canada and ramped up production in traditional producers like Saudi Arabia and Iraq. Prices this year fell as low as $27 a barrel, a 13-year low and down from a peak of $114 a barrel in June 2014.
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IEA Report: https://www.iea.org/oilmarketreport/omrpublic/
Oil Prices up on IEA report - August 11
Oil Prices up on IEA report - August 11
Dan Steffens
Energy Prospectus Group
Energy Prospectus Group
Re: Oil Prices up on IEA report - August 11
Also on Thursday: Saudi Arabia’s energy minister Khalid al-Falih said his country was ready to take action to support the oil market. Mr. Falih said market forces like supply and demand were already rebalancing, but Saudi Arabia would discuss with other producers next month if more action was necessary.
Dan Steffens
Energy Prospectus Group
Energy Prospectus Group
Re: Oil Prices up on IEA report - August 11
U.S. crude futures surged as much as 5%, enjoying one of their strongest one-day moves in three months, amid expectations for further tightening between global supply and demand following bullish comments from a top industry watchdog on Thursday.
On the New York Mercantile Exchange, WTI crude for September delivery traded between $41.11 and $43.86 a barrel before closing at $43.40, up 1.69 or 4.05% on the session. At session-highs, the front month contract for U.S. crude soared to its highest level since July 25. On the Intercontinental Exchange (ICE), brent crude for October delivery wavered between $43.47 and $46.30 a barrel, before settling at $45.94, up 1.89 or 4.29% on the day.
Crude prices rose sharply after the Paris-based International Energy Agency indicated on Thursday that global energy markets could be on the verge of rebalancing in the coming months. The forecasts came despite indications that world demand growth for oil could ease over the remainder of the year due primarily to a "dimmer macroeconomic outlook," in response to the Brexit decision and widespread easing from Central Banks worldwide. For 2016 as a whole, the IEA now expects global demand for oil to increase by 1.4 million bpd, down by 0.1 million from its previous estimate. At the same time, the IEA anticipates that global demand growth will slow to 1.2 million bpd in 2017, as underlying support from low oil prices continues to diminish.
Still, the reduced pace is more than offset by sharp declines in Non-OPEC supply growth, as U.S. Shale Producers struggle to stay online while crude prices remain considerably below their 5-year average. By year's end, the IEA forecasts that Non-OPEC supply growth will decline by 0.9 million bpd in comparison with last year's record production levels. While the IEA expects that producers will pump at a higher rate in 2017, the 0.3 million bpd increase will not be enough to outweigh the added demand.
The report comes days after OPEC president Mohammed bin Saleh al-Sada hinted that a group of major producers could discuss a plan aimed at stabilizing persistently low oil prices at an energy conference in Algeria next month. Earlier this spring, a comprehensive production freeze between Russia, Saudi Arabia and two other nations abruptly collapsed after Saudi officials insisted that rival Iran take part in any deal requiring participants to cap output.
OPEC's latest monthly report, released on Wednesday, showed that Saudi Arabia pumped 10.67 million bpd of crude in July, its highest level on record. In addition, Iranian output on the month increased by 10,000 bpd to 3.62 million, approximately 468,000 bpd higher than its 2015 daily average.
On the New York Mercantile Exchange, WTI crude for September delivery traded between $41.11 and $43.86 a barrel before closing at $43.40, up 1.69 or 4.05% on the session. At session-highs, the front month contract for U.S. crude soared to its highest level since July 25. On the Intercontinental Exchange (ICE), brent crude for October delivery wavered between $43.47 and $46.30 a barrel, before settling at $45.94, up 1.89 or 4.29% on the day.
Crude prices rose sharply after the Paris-based International Energy Agency indicated on Thursday that global energy markets could be on the verge of rebalancing in the coming months. The forecasts came despite indications that world demand growth for oil could ease over the remainder of the year due primarily to a "dimmer macroeconomic outlook," in response to the Brexit decision and widespread easing from Central Banks worldwide. For 2016 as a whole, the IEA now expects global demand for oil to increase by 1.4 million bpd, down by 0.1 million from its previous estimate. At the same time, the IEA anticipates that global demand growth will slow to 1.2 million bpd in 2017, as underlying support from low oil prices continues to diminish.
Still, the reduced pace is more than offset by sharp declines in Non-OPEC supply growth, as U.S. Shale Producers struggle to stay online while crude prices remain considerably below their 5-year average. By year's end, the IEA forecasts that Non-OPEC supply growth will decline by 0.9 million bpd in comparison with last year's record production levels. While the IEA expects that producers will pump at a higher rate in 2017, the 0.3 million bpd increase will not be enough to outweigh the added demand.
The report comes days after OPEC president Mohammed bin Saleh al-Sada hinted that a group of major producers could discuss a plan aimed at stabilizing persistently low oil prices at an energy conference in Algeria next month. Earlier this spring, a comprehensive production freeze between Russia, Saudi Arabia and two other nations abruptly collapsed after Saudi officials insisted that rival Iran take part in any deal requiring participants to cap output.
OPEC's latest monthly report, released on Wednesday, showed that Saudi Arabia pumped 10.67 million bpd of crude in July, its highest level on record. In addition, Iranian output on the month increased by 10,000 bpd to 3.62 million, approximately 468,000 bpd higher than its 2015 daily average.
Dan Steffens
Energy Prospectus Group
Energy Prospectus Group