IEA says 90% compliance in Opec cut
Global demand for oil should be more vigorous than initially anticipated due to cuts
Opec countries are complying almost fully with a landmark deal to reduce the global oil glut, but demand is likely to be more vigorous than anticipated this year, the International Energy Agency said yesterday.
Under an agreement that came into effect in January, Opec countries throttled oil output by one million barrels per day to 32.1 million bpd, said the watchdog which analyses energy markets for major oil consuming nations. “The IEA estimates ... a record initial compliance rate of 90 per cent, with some producers, notably Saudi Arabia, appearing to cut by more than required,” it said. Oil held gains above $53 (Dh194) a barrel as output cuts from Organisation of the Petroleum Exporting Countries (Opec) and other producing nations are seen clearing a global inventory glut.
Futures climbed as much as 0.3 per cent in New York after rising 1.6 per cent the previous two sessions. The global market will shift into deficit during the first half of this year and US crude stockpiles will shrink amid a decline in imports as the Opec-led curbs take effect, Goldman Sachs Group said last week. Reports from the International Energy Agency and Opec were due yesterday and on Monday, respectively, offering their first updates on the progress of the cuts.
Oil has fluctuated above $50 a barrel since a deal to trim output between Opec and 11 other nations took effect on January 1.
At the same time, the IEA upgraded its estimates for global oil demand growth for 2016 and 2017.
‘Deepest in history’
“This first cut is certainly one of the deepest in the history of Opec output cut initiatives,” it said.
At the end of November, the Organisation of Oil Exporting Countries agreed to cut output by 1.2 million bpd from January 1, initially for a period of six months.
Then in December, nonOpec producers led by Russia agreed to cut their own output to 558,000 bpd.
The aim was to reduce a glut in global oil supply that has depressed prices, which currently stand at around $50-$55 (Dh183.50-Dh201.85)
In view of the output cuts, global demand for oil should be more vigorous than initially anticipated, the IEA said.
It increased its estimates for third month in row, calculating that demand rose by 1.6 million bpd to 96.6 million bpd in 2016. per barrel.