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Oil market nears balance as demand firms, output drops - IEA
September 13, 2017, 5:43 pm

Global oil markets are headed towards greater supply/demand balance as world oil demand is firming and OPEC and non-OPEC countries are in greater compliance on production restraint, the International Energy Agency said on Wednesday. In its latest monthly "Oil Market Report (OMR)," the major consumer countries' agency noted that "oil demand grew very strongly year-on-year" in the second quarter of the year, rising 2.3 million barrels per day (mbpd) or 2.4 percent.

As a result, the IEA has revised upwards its demand growth forecast to 1.6 mbpd for all of 2017, when overall demand should reach 97.7 mbpd before rising to 99.1 mbpd in 2018.

Most of the increase in demand came from the industrialised OECD countries, but the IEA warned that there could be a slowdown in US demand growth because of the impact of recent hurricanes in Florida and Texas. Meanwhile, oil supply in August fell by 700,000 barrel per day (bpd) to drop to 97.7 mbpd, equal to the average demand forecast for this year, although supply levels are 1.2 mbpd higher than at the same time a year ago.

On the agreement to restrain production by most OPEC members and a number of non-OPEC producers, the IEA said that compliance with this agreement improved in August.

OPEC's output decreased by 210,000 bpd for the first time in five months and the "twelve members bound by OPEC's supply pact raised their compliance rate to 82 percent from 75 percent during July." Overall compliance with the accord among OPEC producers now stands at 86 percent since the agreement came into force at the beginning of the year.

At the same time, August compliance by "non-OPEC countries cooperating with production cuts achieved more than 100 percent compliance for the first time," the OMR remarked.

Non-OPEC producers reduced output between July and August by over 600,000 bpd. The IEA also noted that there was little or no stock build in July, which is normally a period when inventories are shored up.

OECD commercial stocks were unchanged at 3.016 billion barrels and are now only 35 million above their five-year average and could soon fall below that level because of the impact of hurricane damage in the US. 

Source: KUNA

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