Oil market likely to be balanced next year even with rising output
LONDON: Global supply and demand for crude oil will be largely balanced next year, as growth in consumption helps erode a threeyear-old overhang of unused fuel and should mostly offset a steep rise in output, the International Energy Agency (IEA) said.
In its monthly oil market report, the Paris-based IEA said it continued to see global demand for crude growing by 1.6 million barrels per day (bpd) this year, before moderating to 1.4 million bpd next year.
“Looking into 2018, we see that three quarters out of four will be roughly balanced – again using an assumption of unchanged Organisation of the Petroleum Exporting Countries (Opec) production, and based on normal weather conditions,” the agency said.
“Taking 2018 as a whole, oil demand and non-Opec production will grow by roughly the same volume and it is this current outlook that might act as the ceiling for aspirations of higher oil prices.”
Commercial oil stocks likely fell in the third quarter of this year, only the second draw since the crude price crashed in 2014, thanks to a drop in the amount of oil held in floating storage or in transit, the IEA said. Commercial stocks in industrialised countries fell in August by 14.2 million barrels to 3.015 billion barrels, leaving a surplus of 170 million barrels above the five-year average, the IEA said.
However, the IEA said its numbers implied a build of up to 800,000 bpd could take place in the first quarter of next year, meaning Opec and its partners couldn’t afford a slip in adherence to their supply-restraint deal.
Opec supply was little changed in September at 32.65 million bpd, but down 400,000 bpd from a year earlier, meaning the group’s compliance with its self-imposed 1.2-million bpd output cut stood at 88% last month and 86% for the year to date, the IEA said.
Together with its partners, which include Russia, Oman and Kazakhstan, the group has agreed to restrain output by 1.8 million bpd until March next year.
“There is little doubt that leading producers have re-committed to do whatever it takes to underpin the market and to support the long process of rebalancing,” the agency said. — Reuters