The International Energy Agency (IEA) executive director Fatih Birol does not see the oil market rebalancing until late next year, expressing a gloomier view on the crude glut than the agency’s forecasts from earlier this year, and even from its Oil Market Report from mid-September.
If a “major intervention” does not take place, supply will continue to outpace demand until late 2017, Birol said in an interview with Bloomberg Television at the International Energy Forum in Algiers on Tuesday. On the sidelines of the forum, the Algerian capital is also hosting an informal OPEC meeting aimed at discussing possible measures to prop up crude prices. Analysts do not expect a deal on output to be reached.
Commenting on supply, demand and market fundamentals, IEA’s chief Birol said that oil demand is now “weak, weaker than many thought” while supply is strong, especially from Middle Eastern countries, and stockpiles are huge. Still, Birol stopped short of saying that the OPEC members should not leave Algiers without a deal on intervention on the market. There are many ways to support oil prices in order to curb declining investments, but IEA’s chief prefers ways that are “in line with market fundamentals”.
Birol’s comments are way more bearish than IEA’s forecasts from five months ago, when the agency said that the global glut in oil supplies could shrink substantially in the second half of this year. Back in April, the IEA put the supply overhang at some 1.5 million barrels per day (mb/d), but expected the excess to vanish almost entirely in the second half of the year.
IEA’s Oil Market Report from earlier this month had anticipated that supply would “continue to outpace demand at least through the first half of next year”.
Now the agency’s chief is extending the bearish outlook until late 2017, with demand growth expected lower.
Birol is attending the Algiers forum and is meeting with various oil producers. While many of the smaller OPEC members support a possible deal on output, the larger members continue to play the ‘who-will-blink-first’ game.
By Tsvetana Paraskova for Oilprice.com
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Tsvetana is a writer for Oilprice.com with over a decade of experience writing for news outlets such as iNVEZZ and SeeNews.