OPEC & IEA Butt Heads Over Oil Market Recovery
couple hours ago oilpro.com
The global supply glut will persist through 2016, the IEA said in its monthly oil market report on Tuesday, as demand growth slows from a five-year peak. Conversely, OPEC's monthly report on Monday said that global oil consumption will rise while non-OPEC supply will contract in 2016.
Observe the contrast between the OPEC chief's words and those in the IEA report:
OPEC Secretary-General Abdullah Al-Badri: "The current situation in the market is positive...I expect to see a balanced market in 2016, if the current situation persists." The 12-member group projects US oil production will fall next year for the first time in 8 years.
IEA: “The market may be off balance for a while longer,” the IEA said. “A projected marked slowdown in demand growth next year and the anticipated arrival of additional Iranian barrels — should international sanctions be eased — are likely to keep the market oversupplied through 2016.”
Overall, the IEA report is more bearish in terms of outlook. Here are some of the key takeaways:
2016 Demand Outlook "Markedly Softer"
The IEA said that global oil demand growth will revert to long-term trend levels of 1.2 M/bpd next year, down from 1.8 M/bpd in 2015, due to a weaker economic forecast for oil producers, such as Brazil, Canada, Russia, Venezuela, and Saudi Arabia.
Global consumption will average 95.7 M/bpd next year, approximately 100,000 bpd less than forecast in last month’s report.
“The demand outlook for 2016 looks markedly softer” due to “downgrades to the macroeconomic outlook and expectations that crude oil prices will not repeat the heavy declines seen in 2015,” the IEA said.
Iran, Iraq To Add To Glut
Iran could increase production to 3.6 M/bpd from its current 2.9 M/bpd once sanctions are rescinded early next year, the IEA estimated. This new supply could be added in six months and nearly double the rise in oil inventories projected for 2016, the IEA said.
Meanwhile, record production from Iraq drove supplies from OPEC countries higher in September, the IEA said. Iraq increased output by 130,000 bpd to 4.3 M/bpd. However, "severe budgetary strain and ongoing issues with security and infrastructure are likely to limit supply growth in the near term,” the report said.
OPEC Output Up
OPEC production increased by 90,000 bpd to 31.72 M/bpd in September, the highest level since July, and north of the group's 30 M/bpd recommended output ceiling, the IEA said. Output from Saudi Arabia was slightly lower than August at 10.2 M/bpd, however production remained above 10 M/bpd for the seventh consecutive month.
While the IEA raised estimates for non-OPEC supply next year, amid stronger-than-expected production Brazil, Canada and Russia, it will still contract significantly in 2016.
Total supply from non-OPEC countries is seen to fall by 500,000 bpd, which the IEA said in last month's report was the steepest drop since 1992. As noted above, the IEA forecasts US oil production will decline to 12.56 M/bpd in 2016, from 12.75 million this year.
“Non-OPEC supply growth is disappearing fast,” the agency said. “Much of the slowdown is in the US."
The greatest deception men suffer is from their own opinions.
~ Leonardo da Vinci
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