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A global surplus of oil supplies looks likely fall over the rest of 2016, as non-OPEC production drops and demand continues to grow, according to the International Energy Agency (IEA).
The agency’s latest oil market report said non-OPEC production in March was estimated to have fallen by 690 thousand barrels per day (kb/d) compared with the same month last year. It’s in line with its prediction at the start of the year that non-OPEC production in 2016 would be down by 700 kb/d on 2015.
The IEA said: “There are signs that the much-anticipated slide in production of light, tight, oil in the United States is gathering pace.”
The report also predicted demand to rise by 1.2 million barrels per day (mb/d) in 2016, compared with a 1.8 mb/d increase in 2015. As a result “the oil market looks set to move close to balance in the second half of this year,” according to the agency. It said it expected a supply surplus of 1.5 mb/d in the first half of the 2016 to fall to 0.2 mb/d in the second half.
Brent crude has bounced backed to around $44 per barrel (/bbl) after dropping below $30/bbl in January. The global oil market has experienced a prolonged slump since the middle 2014 when Brent crude was trading at more than $110/bbl. The stabilisation of the oil market is the main reason behind a levelling out in gas and power prices in 2016 according to a recent report by price reporting firm ICIS.
The IEA said the recent price rise was partly in anticipation of a meeting of major oil producers scheduled to take place in Doha in Qatar over the weekend. However, it said if the outcome of the meeting is a freeze, rather than a cut in production, “the impact on physical oil supplies will be limited”.
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