Oil Supply is getting tight

[dan_s]

EIA: 'Tight' global surplus oil capacity

NEW YORK--Surplus oil production capacity remains "relatively tight" by historic standards and currently stands at 2.4 million barrels of oil a day, the U.S. Energy Information Administration said in a report Friday.

The EIA said this level of surplus capacity is "quite modest" compared with recent levels, such as the 3.6 million averaged from 2009-11. "Surplus capacity must also be considered in the context of current geopolitical uncertainties, including, but not limited to, the situation in Iran," the report said.

Global oil production averaged 88.7 million barrels a day in July and August, the report said.

Friday's EIA report is the latest in a series of EIA reports mandated by Congress to assess the oil market in countries other than Iran.

The EIA said the oil market "has tightened" since its previous update as global demand outpaced supply in July and August due "largely to expected seasonal factors." As a result of this tightening, global oil stocks fell by 1.2 million barrels a day.

In a further sign of tightening, the EIA pointed to the recent shift toward backwardation in the Brent crude market, whereby the oil for immediate delivery is more costly than the oil for delivery in subsequent months.

The report estimated total output for the Organization of Petroleum Exporting Countries at 30.5 million barrels a day in July and 30.7 million barrels a day in August.

The report said Saudi Arabia's output stood at 9.7 million barrels a day in July and August. Iran's output averaged 2.8 million barrels a day in July and August. That is down from the July-August 2011 Iranian output of 3.7 million barrels a day, according to the EIA

http://www.marketwatch.com/story/eia-ti ... 2012-08-25