Shrinking Surplus | Russell T. Rudy Energy LLC
Many industry observers, including myself, were skeptical when oil prices began their recent modest rise. It appeared that the tentative price recovery was driven by wishful thinking on the part of speculators rather than market fundamentals. Admittedly, domestic production was falling, but offset by OPEC increases, thereby doing little to affect the global oil glut which was depressing prices.
Now, “World Oil” reports that no less an authority than the International Energy Agency (IEA) anticipates global stocks falling in the first half of this year, sooner than previously projected. The agency still sees supply exceeding demand by 1.3 million barrels per day (MMbopd) in the first half of 2016, but this is down from their previous estimate of 1.5 MMbopd.
Non-OPEC production is dropping faster than originally anticipated. The fact that rig counts and output in the U. S. are falling is not news. However, the wildfires in Canada have diminished that nation’s oil output as well.
However, OPEC production remains at its highest level since 2008, driven by restoration of Iran’s output to pre-sanction levels. There are also increases in Iraq and the United Arab Emirates which have more than offset disruptions in Kuwait and Nigeria. The IEA concludes that OPEC will pump about 500,000 bopd more than consumers will require in 2016.
The good news is that the IEA sees global demand as increasing to 95.9 MMbopd driven by China, Russia, and India, which is surpassing China as the premier growth market for oil.
Oil stocks in developed nations fell in February and continued to do so in March, leading the IEA to conclude that “The global supply surplus of oil will shrink dramatically later this year.”
To read the article in its entirety, please go to http://www.worldoil.com/news/2016/5/12/iea-sees-smaller-global-oil-surplus-as-india-drives-demand-gains .
Russell T. Rudy Energy, LLC buys oil, gas and mineral interests nationwide. Please call (800-880-0940), or write (info@rudyenergy.com ) to let us know if you agree, disagree or would just like to comment on this, or any of our posts.
