According to a recent article on Bloomberg, the International Energy Agency (IEA) has predicted that the oil market will re-balance and the global glut in oil supply will ease by 2017.
States the latest IEA report: “The world surplus will diminish to 200,000 barrels a day in the last six months of the year from 1.5 million in the first half.” This is driven by a reduction in U.S. shale output, and the persisting financial barriers to sales on Iran, leading to reduced exports.
Supplies from non-OPEC countries will be down around 700,000 bbl/d this year, led by the reduction in U.S. shale output, and it is becoming increasingly evident “that output declines are accelerating,” said the IEA. Further, the IEA is confident that global fuel consumption will increase in 2016 by 1.2 million bbl/d, as ‘India is close to surpassing China as “the main engine of global demand growth.”’
With the expected 1.2 mb/d growth in oil demand for the year, and the declining oil supply, the IEA concluded that the balancing of the oil market seems within reach in the second half of this year or early 2017.