Global oil glut to last un­til mid-2017

The Myanmar Times - - International Business -

A GLOBAL oil glut that has hurt pro­duc­ers but means cheaper pump prices will go on for at least six months longer than pre­vi­ously thought, the IEA said, send­ing world oil prices slump­ing.

The In­ter­na­tional En­ergy Agency said de­mand growth was slow­ing while sup­ply was ris­ing, mean­ing the glut was now due to linger “at least through the first half of next year”.

The Paris-based or­gan­i­sa­tion had ear­lier seen the oil over­sup­ply dis­ap­pear­ing in the lat­ter part of 2016.

The tim­ing of the world oil mar­ket’s re­turn to bal­ance is “the big ques­tion”, the IEA said in its monthly re­port. The or­gi­sa­tion added that cur­rent prices – above US$45 – would sug­gest sup­ply falling and strong de­mand growth.

“How­ever, the op­po­site now seems to be hap­pen­ing,” it said. “De­mand growth is slow­ing and sup­ply is ris­ing.”

The trend may fuel spec­u­la­tion of a pos­si­ble pro­duc­tion freeze be­ing agreed be­tween Or­gan­i­sa­tion of the Pe­tro­leum Ex­port­ing Coun­tries (OPEC) and non-OPEC mem­ber Rus­sia in Al­ge­ria later this month.

China and In­dia, which had been key driv­ers re­cently of de­mand growth, are “wob­bling”, it said, while a slow­down in the United States and eco­nomic con­cerns in de­vel­op­ing coun­tries have also con­trib­uted to the sur­prise de­vel­op­ment.

Global oil de­mand is now ex­pected to grow by 1.3 mil­lion bar­rels per day (mb/d) in 2016, to 96.1 mb/d, from its orig­i­nal fore­cast of 1.4 mb/d growth.

The IEA also trimmed its de­mand growth fore­cast by 200,000 bar­rels per day, to 97.3 mb/d.

On the sup­ply side, out­put fell in Au­gust, led by pro­duc­ers out­side of the car­tel.

Af­ter gains in June and July, global oil sup­plies dropped by 300,000 bar­rels per day last month, to 96.9 mb/d.

Non-OPEC sup­ply is ex­pected to re­bound next year, af­ter de­clin­ing this year.

Pro­duc­ers Saudi Ara­bia, Kuwait, the United Arab Emi­rates and Iraq are all at, or near, all­time highs, the re­port said.

“Saudi Ara­bia’s vig­or­ous pro­duc­tion has al­lowed it to over­take the US as the world’s largest oil pro­ducer,” it added.

The US had held the spot since April 2014.

In late 2014, OPEC shifted its strat­egy to de­fend mar­ket share, rather than price, a move which has hit high-cost non-OPEC pro­duc­ers es­pe­cially hard.

Among them, the United States, for­merly the en­gine of non-OPEC sup­ply growth, has par­tic­u­larly suf­fered.

As a re­sult of the stubborn sup­ply glut, pro­duc­ers have been hurt by a plunge in crude prices from around $100 in mid-2014 to 13-year lows of below $30 at the start of this year. –

Newspapers in English

Newspapers from Myanmar

© PressReader. All rights reserved.