The global oil market is likely to rebalance in the first half of 2017 instead of the second half after OPEC and other major producers agreed to cut supply, according to the International Energy Agency.
“If OPEC promptly and fully sticks to its production target, assessed at 32.7 mbd, and non-OPEC producers deliver the agreed cuts of 558 kbd outlined on 10 December, then the market is likely to move into deficit in the first half of 2017 by an estimated 0.6 mbd,” according to IEA December report.
Before the agreements, IAE expected the market to rebalance in the second half of 2017.
IEA raised its 2016 global net demand growth number to 1.4 mbd and that for 2017 to 1.3 mbd, after revising Russian and Chinese data.
Last month, OPEC reached a landmark agreement to cut production for the first time since 2008. On Saturday, non-OPEC producers agreed to reduce supply— their first since 2001— which marks a major departure from the market share policy followed for the past two years.
OPEC’s cut to crude production of 1.2 mbd almost matches its deliberate production increase of 1.3 mbd in the twelve months to October (the month on which the OPEC cuts are based), while the non-OPEC group has seen its crude output fall in the same period by about 0.9 mbd.
IEA raised its 2016 global net demand growth number to 1.4 mbd and that for 2017 to 1.3 mbd, after revising Russian and Chinese data.
Oil stockpiles will decline by about 600,000 barrels a day in the next six months as curbs by OPEC and its partners take effect, said the agency, which had previously assumed inventories wouldn’t drop until the end of 2017.
Russia, the biggest producer outside OPEC to join the deal, will gradually implement the full reduction it promised, according to the IEA.
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