The International Energy Agency believes that the price of oil isn’t likely to go above $50/barrel, despite a rise of almost 90% since its thirteen-year low back in January.
Advertisement
Oil supply and demand will balance in the second half of 2016 after a series of unplanned production outages, but the market is expected to tilt into surplus in the first half of next year, the International Energy Agency said on Tuesday.
The report revises its May forecast of 1.2 million barrels per day (bpd) by stating that demand growth in 2017 will likely increase by 1.3 million bpd, the same rate as this year, to 97.4 million bpd.
“Other Asia, led by India, is anticipated to be the main contributor to oil demand growth in 2016”.
Oil has surged more than 80% from a 12-year low in February as the global glut is trimmed by disruptions and a slide in US output, which is under pressure from the Organization of Petroleum Exporting Countries’ policy of pumping without limits.
The oil production expanded mainly in Kuwait, Iran and Saudi Arabia and declined in Nigeria, Venezuela and Iraq.
Brent crude futures fell 70 cents on the day to US$49.13 a barrel by 1125 GMT, while USA crude prices fell 47 cents to US$48.02. “The expected decline in OPEC’s net export earnings is attributed to lower forecast annual crude oil prices in 2016 compared with 2015”, EIA said. By types of energy categories, healthy vehicle sales and the low oil price environment were expected to stoke demand for transportation fuels. In May, OPEC’s output fell by 100,000 barrels a day, the group said, citing independent sources.
The price drop is hitting non-OPEC supply as companies have delayed or cancelled projects around the world.
“In this regard, by the end of 2016 the average annual figure can reach 800,000-840,000 bpd of oil”, the OPEC tables reflect.
Advertisement
The agency estimates include 2017 non-OPEC supply will grow by 200,000 barrels of oil per day year-over-year while demand will see growth of 1.3 million barrels per day. As the U.S. driving season kicks off, OECD gasoline stocks stand above average levels and previous year in absolute and days of forward demand terms.
