• 4 minutes Nord Stream 2 Halt Possible Over Navalny Poisoning
  • 8 minutes America Could Go Fully Electric Right Now
  • 11 minutes JP Morgan says investors should prepare for rising odds of Trump win
  • 1 day Permian in for Prosperous and Bright Future
  • 12 hours Daniel Yergin Book is a Reality Check on Energy
  • 1 day YPF to redeploy rigs in Vaca Muerta on export potential
  • 1 day Gepthermal fracking: how to confuse a greenie
  • 18 hours Famine, Economic Collapse of China on the Horizon?
  • 18 hours Oil giants partner with environmental group to track Permian Basin's methane emissions
  • 2 days US after 4 more years of Trump?
  • 2 days Top HHS official takes leave of absence after Facebook rant about CDC conspiracies
  • 2 days The Perfect Solution To Remove Conflict Problems In The South China East Asia Sea
  • 12 hours Open letter from Politico about US-russian relations
  • 3 days Surviving without coal is a challenge!!
  • 4 days Portuguese government confirms world record solar price of $0.01316/kWh
Arthur Berman

Arthur Berman

Arthur E. Berman is a petroleum geologist with 36 years of oil and gas industry experience. He is an expert on U.S. shale plays and…

More Info

Premium Content

IEA Offers No Hope For An Oil-Price Recovery

The International Energy Agency (IEA) November report offers no hope for an oil-price recovery any time soon. Over-supply and weak demand for oil will dominate through 2016.

The world has a 1.6 million barrel per day oil production surplus (supply minus demand) as the oil glut enters its 8th consecutive quarter (Figure 1).

(click image to enlarge)

The supply surplus is 710,000 barrels per day lower than it was in the 2nd quarter of 2015 but is higher than any other quarter since the oil-price collapse began. In fact, it is higher than any other quarterly surplus in the past decade (Figure 2). Related: U.S. Oil Production Holding Its Own, Which Can Only Mean One Thing…

(Click to enlarge)

The oil demand forecast for 2015 is the only hopeful part of the IEA report with demand growth estimated at 1.8 million barrels per day compared to 2014 (Figure 3). Related: Is The Oil Industry Really Subsidized?

(Click to enlarge)

There are two important qualifications, however, to this good news. Related: Oil Tankers Are Filling Up As Global Storage Space Runs Low

First, the comparison is positive only compared to 2014, the worst year for demand growth since the Financial Collapse in 2008. Second, demand growth of 1.8 million barrels per day includes IEA’s estimate for the 4th quarter of 2015. Growth through the 3rd quarter is only 1.5 million barrels per day.

The really bad news, however, is that demand growth for 2016 will fall to 1.2 million barrels per day. This, of course, is also a forecast and is in comparison to the estimated 1.8 million barrels per day for 2015. If 2015 demand growth remains at 1.5 million barrels per day, the 2016 forecast will be flat with 2015.

IEA’s November report is consistent with the EIA report released yesterday. EIA’s report provides a more detailed monthly account of production and consumption than IEA’s quarterly data, and EIA shows that October consumption (a proxy for demand) decreased 510,000 barrels per day compared with September 2015. It further shows that production was flat and that the surplus is not declining as the IEA quarterly data suggests.

The IEA and EIA reports taken together lead me to two unavoidable and disturbing conclusions: over-production continues and a weak global economy is an obstacle to oil-demand growth.

By Art Berman for Oilprice.com

More Top Reads From Oilprice.com:


Download The Free Oilprice App Today

Back to homepage





Leave a comment

Leave a comment




Oilprice - The No. 1 Source for Oil & Energy News