IEA Forecast | Russell T. Rudy Energy LLC
“World Oil” reports that the International Energy Agency (IEA) has reduced its forecast for global energy demand and raised it for supply. Consequently, the agency foresees a growing world-wide surplus and further downward pressure on prices. The major factor driving the supply increase is the removal of sanction on Iranian oil exports.
Global demand is expected to increase but only by 1.3% in 2016. This is primarily attributable to a slowing Chinese economy. The IEA now expects demand of 95.7 million bopd. Non-OPEC supply is expected to drop by 600,000 barrels of oil per day (bopd). However, Iran can add 300,000 bopd by the end of the first quarter and 6000,000 bopd by mid-year. The IEA thinks this might be the only source of OPEC production increases for the year as a surge in Iraqi output seems to be fizzling out, and Saudi Arabia’s production in December of 2015 was slightly down. Nevertheless, on Sunday, the desert kingdom reiterated its commitment to preservation of market share, even if that means falling prices.
When all factors are considered, the IEA predicts that the global oil surplus will increase in 2016 by 285 million barrels. The implications for prices are, unfortunately, obvious.
To read the article in its entirety, please go to http://www.worldoil.com/news/2016/01/19/oil-rout-could-deepen-as-market-drowns-in-oversupply-iea-says .
