Home / Energy/ OPEC sees oil glut shrinking in second half of year

OPEC sees oil glut shrinking in second half of year


Comments / {{hitsCtrl.values.hits}} Views / Wednesday, 15 June 2016 00:00


Reuters: OPEC forecast that the world oil market will be more balanced in the second half of 2016 as outages in Nigeria and Canada help to speed up the erosion of a supply glut.

The Organization of the Petroleum Exporting Countries said its oil output fell 100,000 barrels per day (bpd) to 32.36 million bpd in May, according to its monthly report. That is 160,000 bpd less than OPEC’s forecast of the average demand for its crude in the second half.DFT-6-10

Oil has risen to $50 a barrel from a 12-year low of $27 in January as the outages curb excess supply. These, say OPEC, are accelerating a tightening in the market it expected to happen anyway, as lower prices finally take their toll on higher-cost supply outside the group.

“The excess supply in the market is likely to ease over the coming quarters,” OPEC said in the report, published on Monday.

“Shutdowns in Nigeria and Canada tightened the oil market markedly and brought supply and demand more closely into alignment earlier than many had expected, bolstering prices.”

But OPEC cautioned: “Nevertheless, there is still a massive global supply overhang.”

Prices collapsed from $100 two years ago in a drop that deepened after OPEC refused to cut output, hoping lower prices would curb rival supply. With signs the strategy is working, OPEC at a June 2 meeting made no change to its output policy.

The price drop is hitting non-OPEC supply as companies have delayed or cancelled projects around the world. OPEC forecasts supply from outside producers will decline by 740,000 bpd in 2016 led by the United States, unchanged from last month.

OPEC supply had been climbing since the 2014 policy shift, reaching its highest since 2008 in April. The output drop in May was led by Nigeria, the report said citing secondary sources.

With demand for OPEC crude expected to rise to an average of 32.52 million bpd in the second half as non-OPEC supply falls and seasonal demand rises, OPEC’s report points to a deficit of 160,000 bpd if the group keeps pumping at May’s rate.

OPEC said its output exceeded the demand for its crude by 2.59 million bpd in the first quarter, when prices hit the 12-year low. OPEC stuck with a forecast that world oil demand will rise by 1.20 million bpd this year.

The next closely watched report on global oil supply and demand is due on Tuesday from the International Energy Agency. 


Share This Article


DISCLAIMER:

1. All comments will be moderated by the Daily FT Web Editor.

2. Comments that are abusive, obscene, incendiary, defamatory or irrelevant will not be published.

3. We may remove hyperlinks within comments.

4. Kindly use a genuine email ID and provide your name.

5. Spamming the comments section under different user names may result in being blacklisted.

COMMENTS

Today's Columnists

Depreciating rupee: Avoiding a money-go-round

Wednesday, 17 October 2018

Sri Lanka’s excessive reliance on foreign capital to finance investment under favourable external financial conditions is now leading to disruptions, as those conditions change in a decisive interest rate tightening phase in the United States. As U


Responsible water stewardship in Sri Lanka

Wednesday, 17 October 2018

Unlike many of our regional neighbours, Sri Lanka is blessed with an abundant water table. However, many companies do not feel the full value of this precious resource due to the limited regulation and monitoring of fresh water extraction for busines


Economy in disarray, banks flourishing; can this be true?

Wednesday, 17 October 2018

It is earlier reported that the growth in bank credit accelerated in August despite the tight credit and money conditions and rising non-performing loans in the banking sector. It is further reported that the year-on-year (YoY) growth in credit accel


1/3 of your training budget should be spent on developing leaders for boosting corporate performance

Wednesday, 17 October 2018

“Great companies spend an average of 32% of their training budget on leadership development.” – Brandon Hall’s leadership survey The highest Return On Training Investment (ROTI) comes from helping your managers sharpen the leadership skills


Columnists More