The forecast by OPEC on Monday mentioned that the global oil market would be more stable in the second half of this year as outages in Canada and Nigeria helped in bringing down its excess supply. These, say Opec, are accelerating a tightening in the market it expected to happen anyway, as lower prices finally take their toll on higher-cost supply outside the group.
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The price of OPEC – Organisation of Petroleum Exporting Countries – basket of 13 crudes fell to $46.25 a barrel on Monday, from $47.76 on the previous trading day on Friday.
The oil market is now in balance due to unplanned outages and robust demand, particularly from emerging economies, but this equilibrium will tip into surplus again early in 2017, the International Energy Agency (IEA) said on Tuesday.
The demand for oil this year grew by 400,000 barrels per day more than initially expected, fueled first by use in India and now by American drivers.
The price for Brent crude oil moved lower by 0.9 percent to start the day in NY at $49.89 per barrel.
Crude oil futures fell in early Asian trade on Tuesday, as investors ignored signs of market tightness to focus on concerns over global growth and overnight declines in stocks on the impending vote on Britain’s possible European Union exit. May output totaled 95.4 million barrels a day.
The IEA report contrasts with the United States government’s Energy Information Agency, which sees non-Opec output declining by about 200,000 bpd next year, but even that is too low, Ms Sen reckoned.
Furthermore, Piper Jaffray questions the non-OPEC supply growth projected by the IEA for 2017.
“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”.
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OPEC production fell marginally in May with higher output from Gulf nations offsetting big losses from Nigeria. For the entire year, however, the drawdown on inventories is expected to be just 100,000 barrels a day. Demand growth is forecast to rise at the same rate as this year: 1.3 million barrels a day.
