IEA sees oil market flipping into deficit in second quarter

IEA sees oil market flipping into deficit in second quarter

While the US sanctions on Iran and Venezuela have hindered their crude exports, OPEC and Russia's impeded production for the first half of this year is set to lower overall supply on the global market and push prices higher.

"My expectation for OPEC this year is that they will continue with the production cut that they announced in December".

IEA President Fatih Birol, whose remarks were included in the report, said that there might be extraordinary changes in the global oil industry in the future and that the US would continue to influence the global oil market over this five-year period.

Oil prices were mixed on Thursday after hitting 2019 highs as OPEC stressed the need to extend its production cut program past June while lowering its forecast for crude demand.

Oil prices have risen since the beginning of this year thanks to supply cuts led by OPEC.

The cartel estimated 2018 non-OPEC supply rose by 30,000 barrels a day to 62.19 million barrels.

Despite this strong compliance, market indicators followed by OPEC still suggest a glut could appear.

If OPEC keeps production at current levels, global oil inventories should tighten during this quarter and the next, the report indicated.

Crude inventories in the United States dropped, in contrast to a 3-million-barrel increase estimated in a Bloomberg survey.

The U.S. Energy Information Administration reported U.S. crude oil inventories fell last week as refineries hiked output. Production in Iran and Libya, also exempt, was little changed. "Total demand is projected to exceed 100 million barrels per day during the second half of 2019", the report said. It kept its forecast for growth in global oil demand this year unchanged at 1.24 million bpd.

U.S. West Texas Intermediate (WTI) crude oil futures were at $58.55 per barrel, down 6 cents from their last settlement, and not far off their 2019-high of $58.74 from the previous day.

According to the report, thanks to new drilling technologies, the USA, which is intensifying shale oil production in Texas, is starting a new era where it will dominate the energy market on a global scale.

The cost of the futures contracts of Brent crude oil for May 2019 delivery gained 0.71% amounting to $68.03 per barrel on London's ICE as of 11:10 a.m. Moscow time today, according to the trading data. WTI hit a high of $58.48 a barrel on Wednesday, the highest since November 13.

"(But), worries about growth and future demand for crude oil remain just worries at this stage", said Saxo Bank's Hansen.

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