Global oversupply may not be as bad as the IEA’s report suggests, however, according to a note today from Roger Read at Wells Fargo Securities. While markets clearly remain oversupplied, it is likely not at the 2 MMBOPD level the IEA believes.
The “oversupply during Q1 2016 does not compute with the reported data and the IEA’s prior projections of similar levels of oversupply,” said Read. “Based on reported inventory data, the global oversupply peaked at 1.16 MMBOPD in Q1 2015 and declined to 0.87 MMBOPD in Q4 2015.” With non-OPEC production expected to continue falling, Read believes the oversupply will transition to a deficit by the second half of this year.
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IEA may be overstating the "Oil Glut"
IEA may be overstating the "Oil Glut"
Dan Steffens
Energy Prospectus Group
Energy Prospectus Group