IEA sees world oil mar­ket ‘ad­e­quately sup­plied’

De­mand es­ti­mates cut for 2018 and 2019 by 0.11mn bpd; world oil sup­ply has in­creased by 1.4mn bpd since May; es­ti­mate of call on Opec crude in 2018, 2019 cut by 0.3mn bpd; non-Opec oil sup­ply growth raised sharply for 2018 and 2019

Gulf Times Business - - FRONT PAGE -

DE­MAND ES­TI­MATES CUT FOR 2018 AND 2019:

Oil mar­kets look “ad­e­quately sup­plied for now” af­ter a big in­crease in pro­duc­tion over the last six months but the oil in­dus­try is com­ing un­der strain as it copes with in­creas­ing global de­mand, the West’s en­ergy watch­dog said yes­ter­day.

The In­ter­na­tional En­ergy Agency said in its monthly re­port that the world’s spare oil pro­duc­tion ca­pac­ity was al­ready down to only 2% of global de­mand, with fur­ther re­duc­tions likely to come.

“This strain could be with us for some time and it will likely be ac­com­pa­nied by higher prices, how­ever much we re­gret them and their po­ten­tial neg­a­tive im­pact on the global econ­omy,” the Paris-based IEA said.

Mem­bers of the Or­gan­i­sa­tion of the Pe­tro­leum Ex­port­ing Coun­tries and other ex­porters such as Rus­sia and US shale pro­duc­ers had in­creased oil pro­duc­tion sharply since May, the IEA said, raising out­put by 1.4mn bar­rels per day (bpd). Over­all Opec had boosted pro­duc­tion by 735,000 bpd since May as Mid­dle East Gulf pro­duc­ers such as Saudi Ara­bia and the UAE more than com­pen­sated for de­clin­ing out­put in Venezuela and Iran, which is fac­ing US sanc­tions from next month.

And the out­look for world oil con­sump­tion was fal­ter­ing.

The IEA cut its fore­cast of global oil de­mand growth by 0.11mn bpd for both this year and next to 1.28mn bpd and 1.36mn bpd re­spec­tively.

“This is due to a weaker eco­nomic out­look, trade con­cerns, higher oil prices and a re­vi­sion to Chi­nese data,” said the IEA, which ad­vises ma­jor oil con­sumers on en­ergy pol­icy. OECD com­mer­cial stocks rose by 15.7mn bar­rels in Au­gust to 2.854bn bar­rels, their high­est level since Fe­bru­ary, on strong re­fin­ery out­put and liq­ue­fied pe­tro­leum gas re­stock­ing, the IEA said.

It added that OECD in­ven­to­ries were likely to have risen by 43mn bar­rels in the third quar­ter, the largest quar­terly in­crease in stocks since the first quar­ter of 2016.

“The in­crease in net pro­duc­tion from key sup­pli­ers since May of ap­prox­i­mately 1.4mn bpd, led by Saudi Ara­bia, and the fact that oil stocks built by 0.5mn bpd in 2Q18 and look likely to have done the same in 3Q18, lends weight to the ar­gu­ment that the oil mar­ket is ad­e­quately sup­plied for now,” the IEA said.

Emis­sions rise from an oil re­fin­ery in Mar­cus Hook, Penn­syl­va­nia. The In­ter­na­tional En­ergy Agency said in its monthly re­port that the world’s spare oil pro­duc­tion ca­pac­ity was al­ready down to only 2% of global de­mand, with fur­ther re­duc­tions likely to come.

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