International Energy Agency expects production outside Opec cartel to fall sharply this year.
The International Energy Agency (IEA) said it expects the oversupplied oil market to rebalance by next year, as non-Opec production records its biggest decline in a generation.
An oil glut has prompted a slump in crude prices from a peak of $115 (£80) a barrel in June 2014, but the IEA executive director, Fatih Birol, said on Thursday that production outside tOpec would fall sharply this year, by almost 700,000 barrels a day. He expects oil markets, and prices, to rebalance at the turn of this year, or by 2017 at the latest.
Brent crude, the global benchmark, increased to $45.92 a barrel, up 0.2% on the day, in early London trading. US crude recovered to $44.30, up 0.4% on the day.
Birol said low oil prices had led to investment cuts of 40% over the past two years, especially in the US, Canada, Latin America and Russia.
After meeting Japan’s prime minister, Shinzō Abe, Birol told reporters in Tokyo: “This year, we are expecting the biggest decline in non-Opec oil supply in the last 25 years, almost 700,000 barrels per day. At the same time, global demand growth is in a hectic pace, led by India, China and other emerging countries.”
He added: “When we look at all the fundamentals – demand, supply and stocks – I have all the reasons to believe that in the absence of a major economic downturn we are going to see balance in the markets latest by 2017.”
Birol argued that conditions remained difficult for shale oil producers, despite a recovery in Brent oil prices to above $45 a barrel. “I think $45 is a bit of a relief for all the oil producers around the world, but this is still far lower than to make the entire shale oil production profitable for the United States.”
SOURCE: TheGuardian.co.uk
