Global oil stocks shrinking on robust demand: IEA

LONDON: The global oil surplus is beginning to shrink due to stronger-thanexpected European and US demand growth, as well as Opec and non-Opec production declines, the International Energy Agency (IEA) said yesterday.

The agency, which coordinates the energy policies of industrial nations, raised its 2017 global oil demand growth estimate to 1.6 million barrels per day from 1.5 million bpd.

“The demand growth for the Organisation for Economic Cooperation and Development (OECD) continues to be stronger than expected, particularly in Europe and the US,” the Paris-based IEA said.

Robust demand in industrialised countries was a key factor behind global demand growing by 2.3 million bpd in the second quarter, the highest quarterly year-on-year increase since mid-2015.

On the supply side, global oil output fell by 0.72 million bpd in August due to unplanned outages and scheduled maintenance in Opec member Libya as well as non-Opec countries such as Russia, Kazakhstan, Azerbaijan, Mexico and in the North Sea. It was the first decline in global production in four months.

“Based on recent bets made by investors, expectations are that markets are tightening and that prices will rise, albeit very modestly,” the IEA said.

Opec’s crude output fell in August for the first time in five months on renewed turmoil in Libya, with the cartel’s production decreasing by 0.21 million bpd to 32.67 million bpd.

The 12 members of Opec (Organisation of Petroleum Exporting Countries) bound by a supply-cutting pact raised their compliance to 82% in August from 75% in July. Their compliance for the year so far was 86%.

As a result of production declines and stronger demand, global oil stocks are beginning to rebalance, according to the IEA. – Reuters