The world’s leading energy body said that the global oil glut will persist well into 2016, even as the collapse in prices is pushing up demand at the fastest pace in 5 years.
The International Energy Agency, the west’s oil watchdog, said that global oil supplies are still growing at ‘breakneck speed’ and outstripped consumption in the Q1 by 3m barrels a day, the most since 1998.
The IEA said in its closely watched monthly oil market report that “While a rebalancing has clearly begun, the process is likely to be prolonged. Global inventories will pile up further, demand will not cut into the surplus until late 2016 at the earliest.”
Oil’s plunge to below USD 50 a barrel from a high of USD 115 a barrel in June last year threw the budgets of oil exporting countries into disarray, rocked the financial markets and forced the world’s biggest energy companies to tear up their investment plans.
The IEA said that the oil industry is hunkering down for an extended period of depressed prices and have adopted the ‘lower for longer’ mantra.
While output growth from countries outside the Opec producer cartel has shrunk from 2014 highs, it is still running at about 1.2m barrel per day so far this year due to big investments in US shale and other supplies made previously.
Although non-Opec supply growth will weaken by the end of this year it will not contract until 2016 when the IEA expects a 200,000 barrel per day drop to 57.9 million barrel per day, led by lower supplies from the US.
Source : THE FINANCIAL TIMES
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