Signs that oil prices might have bottomed out, says IEA

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Photo courtesy - Rosneft

The International Energy Agency (IEA) feels oil prices might have emerged from their lowest point thanks to a fall in global surplus due to shrinking non-OPEC supplies.

The energy watchdog said in its latest monthly report that it expects production outside OPEC to decline by 750,000 barrels/day this year, or 150,000 barrels/day more than estimated last month.

“There are signs that prices might have bottomed out,” IEA said, adding that for prices, there may be light at the end of what has been a long, dark tunnel .

OPEC crude oil production eased by 90 kb/d in February to a still-robust 32.61 mb/d with losses from Iraq, Nigeria and the United Arab Emirates partly offset by a substantial rise in flows from post-sanctions Iran. Saudi Arabia, OPEC’s largest producer, held supplies steady, the agency said.

Sharp decelerations in demand growth – particularly in the United States and China – pulled global growth down to a one-year low of 1.2 mb/d in the fourth quarter of last year compared with the year earlier, dramatically below the near five-year high of 2.3 mb/d in the previous quarter. A gain of around 1.2 mb/d is forecast for 2016, it said in a statement.

OECD commercial inventories gained 20.2 mb in January while forward demand cover remained comfortable at 32.7 days. Preliminary data suggest that in February, OECD inventories drew for the first time in a year while volumes of crude held in floating storage increased.

IEA estimated global refinery throughputs at 79.1 mb/d in the current quarter, reflecting weak OECD refinery throughput and a shift of peak spring maintenance to this quarter. Annual growth in the fourth quarter of last year fell to below 1 mb/d amid product stock builds and in line with a slowdown in global oil demand growth.

 

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