The Economy

Global Oil Market Is Near Balance: IEA

Production outages and a drop in U.S. oil production have been more than offset by the flow of oil from Iran.
Katie Kuehner-HebertMay 12, 2016

The global oil market is near balance, as higher output from members of the Organization of Petroleum Exporting Countries has more than offset deepening declines in non-OPEC countries, according to the International Energy Agency’s Oil Market Report for May, released on Thursday. But the balance might not last long, experts say, ending a runup in oil prices.

Global oil supplies rose 250,000 barrels per day in April from the preceding month, to 96.2 million barrels per day. OPEC crude output rose by 330,000 barrels per day, to 32.76 million. Among OPEC countries, a 300,000 barrels-per-day jump in Iranian flows and a boost in supply from Iraq and the United Arab Emirates more than offset outages in Kuwait and Nigeria.

Saudi Arabia’s output was steady near 10.2 million barrels per day, and Iranian supply rose to 3.56 millions barrels per day, a level last hit in November 2011, before sanctions were tightened.

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For the year as a whole, non-OPEC supply is forecast to drop by 0.8 million barrels per day in 2016, to 56.8 million barrels per day.

Oil prices rose on the IEA report, according to The Wall Street Journal.

Brent crude, the global oil benchmark, rose 0.4% to $47.79 a barrel on London’s ICE Futures exchange. On the New York Mercantile Exchange, West Texas Intermediate futures were trading up 0.5% at $46.47 a barrel.

Traders are monitoring production outages in Nigeria, Ghana, and Canada that have supported prices in recent weeks, according to the WSJ. However, analysts say that these disruptions are mostly temporary.

In the United States, crude-oil stockpiles defied analysts’ expectation by dropping by 3.4 million barrels in the week ended May 6, according to the Energy Information Administration. U.S. crude output fell last week to the lowest level since September 2014, to 8.8 million barrels a day.