IEA says global oil market now close to balance

Deepwater drilling is back to challenge shale says Wood Mackenzie

However, the IEA now expects global oil demand to grow a bit more slowly over the course of 2017, by about 1.3m b/d, which is down from the 1.4m b/d increase seen in its previous forecast.

The Paris-based energy watchdog for rich countries said on Thursday in its monthly report that it had cut its estiamte of demand growth for the first three months of this year by 200,000 barrels per day, to 1.1 million bpd, with weaker demand in Saudi Arabia, Iran, Russia, India, South Korea and the United States the main components.

"[But] although the oil market will likely tighten throughout the year overall non-Opec production, not just in the USA, will soon be on the rise again".

USA crude output rose by 36,000 barrels a day last week to 9.24 million barrels a day, the Energy Information Administration reported on Wednesday.

World oil supply fell by 755,000 bpd in March as the Organisation of the Petroleum Exporting Countries (Opec) and non-Opec producers maintained "impressive" compliance with the agreed output cuts.

Demand for crude oil tends to decline in the first quarter of the year, when refineries close for maintenance.

U.S. West Texas Intermediate crude futures were down 3 cents at $53.08 a barrel. The agency trimmed forecasts for global demand by about 100,000 barrels a day to 1.3 million a day.




"The net result is that global stocks might have marginally increased in 1Q17", it said.

The rebound in USA oil output has threatened to derail efforts by the world's largest exporters aimed at reducing a global supply glut and rebalancing the market.

The price of oil LCOc1 has doubled to around $56 a barrel from a 13-year low of $27 hit in January last year, which has encouraged a raft of new supply.

The Paris-based group, which advises oil-importing countries, expects US output to climb by 680,000 barrels a day this year, higher than its previous forecast. While US crude stockpiles declined from a record last week, OPEC said in a report on Wednesday that rivals in the American shale industry are growing stronger.

Commodities analysts at Commerzbank said the question was now "whether the OPEC production cuts really have translated into a reduction in supplies".

"We have an interesting second half to come", it said.

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