IEA: Oil Market Could Tilt Into Deficit
production last year, but if OPEC maintains its output cuts, demand should overtake supply in the first half of this year, the International Energy Agency said on Wednesday.
The IEA's monthly report struck a more bullish note than that issued by the Organization of the Petroleum Exporting Countries on Tuesday, Reuters reported.
OPEC also flagged rising inventory levels, but raised its estimates for production outside the group and did not see a rebalancing between supply and demand until the second half of this year.
The IEA said crude stocks in the world's richest nations rose in January for the first time since July by 48 million barrels to 3.03 billion barrels, more than 300 million barrels above the five-year average.
Compliance by OPEC with its agreed output cut of 1.2 million barrels per day in the first half of this year was 91% in February and, if the group maintains its supply limit to June, the market could show an implied deficit of 500,000 bpd, the IEA said.
"If current production levels were maintained to June when the output deal expires, there is an implied market deficit of 500,000 bpd for 1H17, assuming, of course, nothing changes elsewhere in supply and demand," the IEA said.
Within OPEC, Saudi Arabia has shouldered the burden of the production cuts, offsetting poorer compliance by other nations. In February, Saudi oil production staged a monthly rise of 180,000 bpd, but at 9.98 million bpd, its output remained below its agreed target of 10.06 million bpd and, according to tanker-tracking data, Riyadh is focusing its cutbacks on North America, the IEA said.
"At 32.3 million bpd, the call on OPEC crude during the first quarter of 2017 is higher than average output of 31.9 million bpd so far this year, which could lead to a draw in global inventories," the IEA said, adding that it was not clear if the group will extend its supply agreement. Brent futures were up 77 cents at $51.68 on Wednesday, after tumbling to $50.25 in Tuesday's session, a low since Nov. 30.
US.West Texas Intermediate crude traded up 85 cents at $48.57 a barrel, having risen over a dollar earlier. On Tuesday, it slid as low as $47.09, another low since November.