The global benchmark crude was trading at a 92-cent premium to WTI for August delivery.
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Next year, India’s forecast demand growth of more than 8 per cent, together with China’s slower but still significant 3.3 per cent growth is expected to keep demand growth steady.
The watchdog noted two main factors have transformed the outlook in the past six months – oil demand has grown stronger than IEA anticipated, and the unexpected supply cuts, which in Canada alone, shut-in 1.5 MMBPD. “For the year as a whole, there will be a very small stock draw of 0.1m bpd”, the IEA said in its monthly report.
“Overall, this is another bullish IEA report” that points to “clear light at the end of the tunnel and oil prices well above current levels”, Oswald Clint, a London-based analyst at Sanford C. Bernstein, said in a report.
But the scale of existing inventories and the short-term nature of supply interruptions make it unlikely the price of oil will rise any higher than this year’s peak of $51, reached early last month.
“In short, this data will do little to move the needle in either direction for oil prices, and the energy market will continue to get its cue from the macro-economic environment and global equity markets”.
Oil demand in the first quarter was revised up by 400,000 barrels to 1.6 million barrels/day.
The OMR indicated that “continuing outages in Nigeria and Canada as well as a steady decline in United States oil production” had stoked prices in recent weeks as global supply fell by almost 800,000 b/d in May to stand at 95.4 million barrels per day (mbpd).
Crude futures fell for a fourth session running on Tuesday (Jun 14) as the International Energy Agency warned that huge stockpiles would cap any future price gains. As a result, the agency’s full-year estimated demand growth has been increased to 1.3 million barrels a day. In 2016, the experts expect production in countries outside OPEC to decline by 0.74 million barrels a day to 56.4 million barrels.
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As growth in demand exceeds non-OPEC supply, more crude will be required from OPEC.
