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Global crude oil supply inched down by 140,000 barrels daily last month, to 96.17 million bpd, the International Energy Agency said in the latest edition of its Oil Market Report.
Commercial oil stockpiles in the OECD countries are estimated to have risen from the March 3.025 billion barrels, marking the first increase since January.
The IEA noted that the April supply figure of 96.17 million bpd was 90,000 bpd lower than in April 2016, but added that non-OPEC output this year is set to rise by 600,000 bpd, which will offset OPEC’s and its partners’ 1.8-million-bpd pledged reduction in global supply only partially.
Yet, OPEC’s own production rose in April, by 65,000 barrels daily last month, to 31.78 million bpd, with increased production in Nigeria and Saudi Arabia compensated for production outages in Libya and lower production rates in Iran, both exempt from the cut agreement.
On the demand side, The IEA reiterated its forecast rate of growth at 1.3 million bpd for this year, to a total 97.9 million barrels, although over the first half of the year demand will grow more slowly because of India, the U.S., Germany, and Turkey.
The IEA concluded that the oil market was close to balance in the first quarter of the year, with average supply building by 100,000 bpd on a global level, and at 300,000 bpd for OECD members. If OPEC keeps its output at the April level, the authority estimates an inventory draw of 700,000 bpd by the end of the second quarter. This number will grow if the output cut extension is agreed by everyone.
Even so, the IEA does not see global oil markets returning to balance—or the five-year average, which is used to measure the market balance—before the year’s end. For this to happen, demand must grow and stockpiles must be “drained further”. The latter would be helped by higher refinery runs after the spring maintenance season, with the IEA expecting these to rise by 2.7 million bpd globally by the start of July.
By Irina Slav for Oilprice.com
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Irina is a writer for the U.S.-based Divergente LLC consulting firm with over a decade of experience writing on the oil and gas industry.