The global oil market with increasing evidence of moves to balance supply and demand, according to experts of the International energy Agency (IEA) monthly report released on Thursday. This happens due to the stabilization of demand and falling supply due to reduction of production in countries outside OPEC.
The projected annual demand analysts left at the same level as in the April report, was 95.9 million barrels./day, calling it “solid”. Good indicators on demand in the first quarter “can heat up to the expectations that demand will remain at this level, which may force us to revise our estimate of average figures for 2016,” the report said, but against it last April’s forecasts of the Ministry of interior, according to which growth in world GDP this year was revised downward — from 3.4% to 3.2%. Analysts believe that the argument against the increase of forecast demand.
So that the balance can be achieved at the expense of supply fall. Its excess may begin to decline later in the year, I believe in the IEA.
While “global supply in April rose by 250 thousand Barr./day to 96.2 million barrels./day due to production growth in the OPEC countries, the compensating production cuts from producers outside the organization”, the report said. The extraction of the latter should fall in 2016 by 800 thousand Barr./day to a level of 56.8 million barrels./day.
Despite the current growth, if we take year-on-year, “global production in April rose only by 50 thousand Barr./day against increased by 3.5 million barrels./day a year ago,” analysts of the IEA.
Three weeks ago, the head of the IEA, Fatih Birol said that he expects in 2016 the biggest decline of oil supply of countries outside OPEC, in the last 25 years. In the beginning of may, he talked about reaching oil prices have bottomed.
If the drop in production in countries outside OPEC will continue, why wait for the experts, in the second half of the year we can expect the balance of the oil market, and hence prices for these raw materials. This is supported by the fact that for the first time since February of this year decreased the total oil reserves of the OECD countries, which includes most EU countries, Australia and the USA. Thus, the global excess supply will dramatically decrease this year, but later”, according to the IEA.