IEA says global oil market nears balance even as stocks rise

A pump jack used to help lift crude oil from a well in South Texas? Eagle Ford Shale formation stands idle in Dewitt County Texas

A pump jack used to help lift crude oil from a well in South Texas? Eagle Ford Shale formation stands idle in Dewitt County Texas

Global oil inventories probably increased in the first quarter despite Opec's near-perfect implementation of production cuts aimed at clearing the surplus, the International Energy Agency said. The IEA expects non-OPEC output to rise by 400,000 barrels a day in 2017.

But the organisation predicted supply would grow in coming months, with USA oil-producing firms driving the increase. They have averaged about $55 a barrel so far this year, up from about $45 a barrel for the whole of last year, as the production restraint deal by Opec and 11 non-Opec producers has begun to eat into the record world oil stockpile.

OPEC crude oil production fell by 365,000 barrels a day to 31.68 million barrels in March.

"Even after taking into account production cut pledges from the eleven non-OPEC countries, unplanned outages in Canada as well as in the North Sea, we expect (non-OPEC) production will grow again on a year-on-year basis by May", the report said.

"New data shows weaker-than-expected growth in a number of countries including Russia, India, several Middle Eastern countries, Korea and the U.S., where demand has stalled in recent months", it said.

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The Paris-based energy watchdog for rich countries said in its monthly report that it had cut its estimate of demand growth for the first three months of this year by 200,000 barrels per day to 1.1 million bpd, with weaker demand in Saudi Arabia, Iran, Russia, India, South Korea and the United States the main components.

In the first quarter of the year, the IEA said oil stockpiles in industrialised countries lifted "marginally" as inventories in the Organisation for Economic Cooperation and Development (OECD) fell by 17.2m barrels in March, resulting in an increase of 38.5m barrels, or 425,000 barrels per day (bpd), in the first three months of the year.

Reports this week said that OPEC kingpin Saudi Arabia is pushing the cartel's producers to extend the agreement by another six months at their meeting in May.

Crude oil futures were largely unchanged on Thursday, with the market torn between rising US production and the output cuts being made by OPEC and other producers. For the full year, we see growth of 485 kb/d [thousand barrels per day], compared to a decline of 790 kb/d in 2016.

The IEA said it raised its second-quarter demand forecast but cut for the second half of the year. The contract was set for an overall weekly gain after touching a one-month high on Wednesday.

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