- Non-OPEC supply will decline 750,000 b/d as U.S. falters
- OPEC-Russia output freeze to have little impact in first half
Oil prices may have passed their lowest point as shrinking supplies outside OPEC and disruptions inside the group erode the global surplus, the International Energy Agency said. Production outside the Organization of Petroleum Exporting Countries will decline by 750,000 barrels a day this year, or 150,000 barrels a day more than estimated last month, the agency said. Markets are also being supported by output losses in Iraq and Nigeria, and as Iran restores production more slowly than planned following the end of international sanctions, it said.
“There are signs that prices might have bottomed out,” the Paris-based adviser to 29 countries said in its monthly market report on Friday. “For prices there may be light at the end of what has been a long, dark tunnel” as market forces are “working their magic and higher-cost producers are cutting output.”
The outlook for the balance of supply against demand in the first half is “essentially unchanged” from last month, the IEA said. World oil consumption will increase by 1.2 million barrels a day, helping to reduce the global surplus from 1.7 million barrels a day in the first half to 200,000 a day in the last six months of the year. Last month it projected the second-half surplus would be 300,000 a day. The agency repeated that it could lower the demand estimate as the price recovery curbs U.S. appetite for gasoline.
The return of Iran after January’s nuclear agreement lifted sanctions on its oil trade “has been less dramatic than the Iranians said it would be” and further recovery will be “gradual,” the agency said. While the OPEC member vowed to restore 500,000 barrels a day as soon as sanctions ended, it instead boosted output by 220,000 barrels a day in February to 3.22 million, the highest in four years.
U.S. oil production will decline by 530,000 barrels a day this year as the price rout takes its toll on investment and drilling, the IEA said. The agency also lowered its supply outlook for Brazil and Colombia.
Originally Aired: March 11, 2016 — 3:00 AM CST