Oil prices also fell following a rise in U.S. inventories that left investors ignore the declaration by International Energy Agency (IEA) that the oil market is now in balance.
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Nigeria’s troubles – as well as those in fellow Opec member Libya – look long-term, the IEA said, while non-Opec countries will see production continue to fall by an average 900,000 bpd this year, including 500,000 bpd for USA shale output. “The excess supply in the market is likely to ease over the coming quarters”, Opec said in the report, resulting in “a more balanced oil market toward the end of the year”.
Brent crude oil futures slipped below $50 a barrel, falling 44 cents to $49.91 by 0445 GMT, dropping for a fourth successive day. Still, the “enormous inventory overhang” that accumulated during years of oversupply will limit any significant increase in prices, it said.
OPEC says global oil supply and demand will start to rebalance from the second half 2016 in its Oil Market report released today. “Canada’s wildfires at their peak removed up to 1.5m barrels per day of production capacity; in Nigeria, militant action has forced production down to thirty-year lows”.
On the supply side, the IEA said production across the board was down by around 800,000 bpd.
OPEC has been unable to agree on any production caps at a key meeting earlier this month, as the moderate price increases took away some of the pressure to curb outputs.
However, “overproduction persisted” in May, despite a slight decline (-0.1 million bpd) mainly due to unrest in OPEC-member Nigeria.
Fears of a protracted oil glut have eased on the back of growing global demand and a series of interruptions to supply, according to new analysis from the International Energy Agency.
Iran’s crude output rose by 80,000 barrels a day to 3.64 million barrels-the highest since June 2011.
Moreover, low oil prices are driving down production in non-OPEC countries, the report said.
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US crude oil refinery inputs averaged over 16.3 million barrels per day during the week ending June 10, according to the EIA.
