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10.02.2017 14:42
© iea.org
Global demand for oil continues to pick up due to recent measures to rebalance the market have come into play, according to the latest report by the International Energy Agency.
On the demand side of the balance, global growth has been revised upwards for the third month in a row and for 2016 it is now seen at 1.6 mb/d. Stronger than expected growth in Europe, partly influenced by colder weather in 4Q16, is a key factor alongside the long-term growth in China, India and non-OECD countries. In 2017, assuming normal weather conditions we expect demand to grow by 1.4 mb/d, an increase of 0.1 mb/d from the last report.
IEA’s observers of the oil market this month have focussed on the level of compliance with the production cuts agreed by members of OPEC and eleven non-OPEC countries, closely followed by interest in the expected recovery in US light, tight, oil production. The IEA estimates that OPEC production in January was 32.1 mb/d and that the cuts achieved a record initial compliance rate of 90%, with some producers, notably Saudi Arabia, appearing to cut by more than required. While seaborne oil export data, from which secondary source estimates of OPEC production are mainly derived, are not complete for January and is subject to revision, OPEC nevertheless appears to have made a solid start to what is a six-month process. This first cut is certainly one of the deepest in the history of OPEC output cut initiatives.
As far as compliance by the non-OPEC producers is concerned, Russia stated at the time of the agreement that its production cut of 300 kb/d, more than half the 558 kb/d committed by the eleven countries, would be phased in gradually and preliminary data shows output down by 100 kb/d in January. While no official data has been released, Oman says it has cut by 45 kb/d in line with its commitment and Kazakhstan is reportedly exceeding its target.
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