EIA: Oil Glut Disappearing Faster Than Expected

The global oil market is on track to be “relatively balanced” this year and next, according to the Energy Information Administration’s Short-Term Energy Outlook Report released Tuesday. That is sooner than it previously expected.

The EIA had forecast small annual average supply builds in both 2017 and 2018, but changed it after “significant revisions” to historical data on liquid fuel consumption, which includes crude oil, Market Watch reported. 

The agency’s January report had said that global oil markets were expected “to be more balanced by mid-2018,” with a rise in supply the first half of that year partially offset by a draw in the second half to result in an increase of about 0.1 million barrels a day for all of 2018.

In its report Tuesday, the EIA said it expects “the oil market to be relatively balanced in 2017 and 2018, with inventory draws averaging 0.1 million barrels a day in 2017 and builds averaging 0.2 million barrels a day in 2018.”

The revisions, which included an upward adjustment to 2016 Chinese oil consumption and supply and changes to demand outside of the Organization for Economic Cooperation and Development, a group of developed world countries, “created a higher base for consumption during recent years and the forecast period,” the agency said.

Despite the sizable historical revisions to consumption and the projection of a balanced market sooner compared with the previous report, the EIA said it has not significantly changed its projection for crude oil prices.

“Current crude oil price levels are near the point where the market balances, allowing US and OPEC production to increase to meet higher demand in 2017 and 2018,” the EIA said.