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OPEC Report Finds Global Oil Market Will Balance amid Worldwide Outages

June 14, 2016 at 19:07 by Andrew Moran

The world oil market will become more balanced in the second half of 2016 amid worldwide outages, says a new monthly report from the Organization of the Petroleum Exporting Countries (OPEC) released on Monday.

Due to outages in Nigeria from militant attacks and Alberta from the Fort McMurray wildfires, the supply glut will be reduced a lot faster than initially expected. OPEC also noted that its current production is lower than the average forecast demand for its crude in the latter part of the year. The last time OPEC produced less than the demand for its oil in an entire quarter was in 2013.

OPEC said in the report:

The excess supply in the market is likely to ease over the coming quarters.

OPEC’s forecasts for global oil supply and demand have remained unchanged. Global oil demand will go up by 1.2 million barrels per day (bpd) in 2016 to 94.18 million bpd. The country with the biggest appetite for oil will be India. Non-OPEC oil production will decline by 740,000 bpd to 56.4 million bpd this year.

In the US, according to OPEC forecasts, total output will decrease by 420,000 bpd to 13.57 million bpd. The reason for the drop is due to producers slashing production because of low oil prices.

The 13 members of OPEC produced 32.36 million bpd in May, which is down 100,000 bpd from April. OPEC output fell because of production declines in Iraq, Nigeria, and Venezuela.

Crude oil prices have been gradually climbing to $50 a barrel since hitting a 12-year low of $27 in January. In the last week, however, oil prices have tumbled slightly over investors fearing Great Britain exiting the European Union as part of a referendum on June 23.

US crude futures settled on Tuesday 0.8%, or $0.39, lower at $48.49 a barrel. Brent crude oil futures also finished the day down 1.1%, or $0.57, at $49.78 per barrel.

The next major report on the global oil market was published on Tuesday by the International Energy Agency.

If you have any questions and comments on the commodities today, use the form below to reply.

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