IEA sees oil stabilizing on higher 2016 demand
REUTERS photoHigher-than-forecast demand should bolster oil prices throughout 2016, despite high stocks continuing to exert downward pressure on prices, the International Energy Agency (IEA) said yesterday..
Global demand for oil will grow by 1.4 million barrels per day (bpd) this year to 96.1 million bpd, the IEA said in its monthly oil market report, revising up last month’s forecasts of a 1.3 million bpd rise.
While predicting a “return to balance” in overall “big picture” market direction, the IEA said “the existence of very high oil stocks is a threat to the recent stability of oil prices.”
Last month the agency had warned significant price rises were unlikely given that “there is an enormous inventory overhang to clear.”
The IEA noted crude prices had edged off an early June peak above $52 dollars per barrel to trade in a $45-$50 range.
Oil prices rebounded earlier this week from two-month lows as an OPEC forecast pointed to an easing of global oversupply.
U.S. benchmark West Texas Intermediate for August delivery Tuesday jumped $2.04 to $46.80 a barrel on the New York Mercantile Exchange., while in London, Brent North Sea crude for delivery in September added $2.22 to $48.47.
In its own July report, OPEC had forecast the global supply glut would ease this year and next, as producers outside the cartel, particularly the U.S., cut production.
The 14-member cartel, which provides about one-third of the world’s crude, has squeezed competitors in recent months by keeping the taps open, saying June production rose by 264,000 bpd to an average 32.9 million barrels bpd.
OPEC predicted global demand growth would pick up in 2017 to allow the market to remove excess stocks.
For 2017, the IEA forecast a 1.3-million-bpd increase to 97.4 million bpd.