The International Energy Agency (IEA) issued its monthly Oil Market Report on Thursday morning. The agency now expects a “dramatic reduction” in the growth of oil stockpiles in the second half of this year. The IEA forecasts that stockpiles will rise by 1.3 million barrels a day in the first half of 2016, falling to 200,000 barrels a day in the latter six months of the year.
In the May report, the IEA said that April’s global crude oil supply increased by 250,000 barrels a day compared with April 2015 supply and averaged 96.2 million barrels a day. April output rose just 50,000 barrels a day, compared with the April 2015 increase of 3.5 million barrels a day. That’s the slowest growth level since the fourth quarter of 2014.
Higher output from OPEC more than offset production declines in non-OPEC countries. For the full year, the IEA raised its non-OPEC production decline from 700,000 barrels a day to 800,000 barrels.
Demand growth for the first quarter has been raised from 1.2 million barrels a day to 1.4 million barrels, led by growing demand in India, China and Russia. Demand growth for the year is forecast at 1.2 million barrels a day, yielding total demand of 95.9 million barrels a day.
The IEA reported that oil production in Iran rose to nearly 3.6 million barrels a day in April, its highest level since November 2011, and exports rose to 2 million barrels a day, up by 600,000 barrels compared with the prior month.
Regarding prices, the IEA had this to say:
A few years ago, shut-ins such as we have seen in Canada would have sent oil prices sharply higher. However, recently Brent crude oil prices have hovered around $45/bbl, with little reaction seen to the Canadian wildfires. General oil market sentiment seems to have improved to such an extent that Brent prices fell into short-lived backwardation in April for the first time since mid-2014, aided by expectations of heavy North Sea field maintenance. Further oil price rises, though, are likely to be limited by brimming crude oil and products stocks that will remain a feature of the market until more normal levels of inventory are reached.
Markets have reacted to Thursday’s IEA report by pushing prices near $47 a barrel for June delivery of West Texas Intermediate (WTI) and above $48 for July-delivered Brent. WTI for June delivery closed at $46.23 on Wednesday and dropped to around $45.80 before bouncing higher on the IEA report.
Want to Retire Early? Start Here (Sponsor)
Want retirement to come a few years earlier than you’d planned? Or are you ready to retire now, but want an extra set of eyes on your finances?
Now you can speak with up to 3 financial experts in your area for FREE. By simply clicking here you can begin to match with financial professionals who can help you build your plan to retire early. And the best part? The first conversation with them is free.
Click here to match with up to 3 financial pros who would be excited to help you make financial decisions.
Have questions about retirement or personal finance? Email us at [email protected]!
By emailing your questions to 24/7 Wall St., you agree to have them published anonymously on a673b.bigscoots-temp.com.
By submitting your story, you understand and agree that we may use your story, or versions of it, in all media and platforms, including via third parties.
Thank you for reading! Have some feedback for us?
Contact the 24/7 Wall St. editorial team.
Latest from 24/7
