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OPEC, led by
Saudi Arabia, agreed last month to cut production to around 32.5
to 33 million barrels per day (bpd) and Russia has signaled it
is ready to join in any effort to temper supply and shrink a
stubborn global surplus of unwanted crude.
Oversupply helped send oil prices from $115 a barrel in June
2014 to as low as $27 in January this year. Crude has since
recovered to around $50 on expectations of a production cut.
The IEA said in its August report it expected world oil demand
to grow at a rate of 1.2 million bpd next year, keeping its
forecast unchanged from last month, but cut its estimate of
growth in 2016 by 40,000 bpd to around 1.2 million bpd, from
around 1.3 million bpd last month.
"Even with tentative signs that bulging inventories are starting
to decline, our supply-demand outlook suggests that the market
-- if left to its own devices -- may remain in oversupply
through the first half of next year," the IEA said. "If OPEC
sticks to its new target, the market's rebalancing could come
faster."
"At this stage, it is difficult to assess how the OPEC supply
cut, if enforced, will affect market balances," the agency
added.
"A significant rebound in production from Libya and Nigeria and
further growth from Iran would suggest that bigger cuts would
have to be made by others, such as Saudi Arabia, to meet the ...
production target."
OPEC members meet next month in Vienna.
Iran is recovering market share after years of Western
sanctions, in Libya, civil unrest has cut production and a
series of attacks on oil infrastructure have curtailed Nigerian
supply.
All three are expected to be exempt from any coordinated cuts,
meaning that the onus will likely rest on some of the
higher-producing members, such as Saudi Arabia and Iraq.
The IEA forecast a decline of 900,000 bpd in non-OPEC output in
2016 to 56.6 million bpd, and expects a rise of 400,000 bpd in
2017.
Global stockpiles fell for the first time since March, down 10
million barrels to 3.092 billion barrels, just shy of July's
record 3.111 billion barrels.
"The fall in stockpiles was largely driven by crude, which fell
in all OECD regions and especially sharply in Asia Oceania. This
brought crude stocks back to early February levels. Refined
product stocks across the OECD hit yet another historic high as
refineries increased runs in August," the IEA said.
The agency said global demand growth has continued to slow after
hitting a five-year high of 2.5 million bpd in the third quarter
of last year, to a four-year low of 800,000 bpd in the third
quarter of this year, due to "...vanishing OECD growth and a
marked deceleration in China."
(Reporting by Amanda Cooper; Editing by Louise Heavens)
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