IEA sees oil market flipping into deficit in second quarter

While the US sanctions on Iran and Venezuela have hindered their crude exports, OPEC and Russia's impeded production for the first half of this year is set to lower overall supply on the global market and push prices higher.

OPEC members and non-OPEC countries participating in the oil production cut deal will meet on March 17-18 in Baku, Azerbaijan, to review output curbs they've been implementing to avert a supply glut and defend oil prices.

Brent crude oil futures were at 67.21 dollars per barrel at 0559 GMT, virtually unchanged from their last close, and within a dollar of the 68.14 dollars 2019-high reached the previous day.

U.S. West Texas Intermediate crude futures edged up 29 cents to $58.55. "The OPEC-plus meeting could give us a little direction", he said.

In addition, the signs of a slowdown in the global economy could cut demand for oil, according to IEA.

"Crude oil continues to grind higher.in response to ongoing production cuts from the OPEC+ group of producers as well as another (output) slump from a blacked-out Venezuela", said Ole Hansen, head of commodity strategy at Denmark's Saxo Bank.

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This week the EIA reported a fall of 3.9 MMbbls (million barrels) in USA crude oil inventories compared to a Reuters poll for a rise of 2.861 MMbbls for the week ended March 8. OPEC announced in December it would be cutting production by 1.2 million bpd in 2019 to help balance the market in the near term.

Goldman expects demand for the first quarter of this year to grow by almost 2 million bpd, obliterating its earlier forecast for 1.1 million bpd and driven by consumption in emerging markets; as for worry over China demand waning, Goldman added that oil consumption in that country actually grew by 340,000 bpd in January and February. Energy prices fell off a cliff in late 2014 but have started to rebound on the back of agreed cuts by OPEC in Vienna a year ago.

But oil consumption has held up so far.

Meanwhile, a weekly report by the U.S. Energy Information Administration (EIA) said U.S. commercial crude oil inventories fell last week as refineries hiked output.

Most of the Opec cartel, along with a number of non-Opec producer-nations led by Russian Federation and known collectively as Opec+, since January 1, have been working to reduce marketed crude by 1.2 million barrels per day (Mmbpd).

(Copyright © 2015. All Rights Reserved.)
 
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