“The market is already swamped with oil, and it is very difficult to prevent a significant rise in oil prices in the short term”, — quotes the Financial Times of February report of the International energy Agency (IEA). “In these circumstances, the short-term risk of negative development has increased”, — the document says.
The IEA’s experts called the recent rise in oil prices a “false dawn”, since the s market was higher than forecast, but growth in world’s hydrocarbon reserves continues. On 20-21 January, the prices fell to 12-year low, dropping below $28/bbl., but by 29 January exceeded $35 and has since been holding above $30/bbl.
In the report the IEA noted that a series of factors in the price decline continues to affect the oil market. In particular, investors, according to experts of Agency, failed to convince that OPEC will agree with other exporters on the reduction of production. “Persistent rumors. remain what they are: rumors,” — said in the document.
Oil production in Iraq in January has set a new record, and it is expected to grow further, according to the IEA. Saudi Arabia, according to preliminary data, also increased supply.
In January, total OPEC production rose by 280 thousand barrels. a day to 32.6 million barrels. a day, which is 1.7 million barrels. more than a year ago. While maintaining the same level of production in OPEC, the excess of supply over demand will be in the first quarter of 2 million barrels. a day, and in the second — 1,5 million Barr.
Supplies exporters outside the cartel, decreased by 500 thousand Barr./day before last year’s level. In General, in 2016 oil export are not members of OPEC, according to IEA, will be reduced by 600 thousand Barr./day to 57.1 million barrels. a day. The Agency notes that the reduction in production of shale oil in the United States “takes an awfully long time”, and sustainability of production still persists.
The increased demand this year will amount to 1.2 million barrels. /day, which is significantly less than a year ago. This is due to the economic slowdown in Europe, China and the United States, notes the IEA. The document notes that oil prices would put pressure not only growth stocks but also the dollar strengthening.
FT reminds that in February is also expected to publish a five-year forecast from the IEA.