Oil mar­ket likely to be bal­anced next year even with ris­ing out­put

The Star Malaysia - StarBiz - - Foreign News -

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

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