PARIS — Global oil supplies eased by 180 000 barrels per day (bpd) in February, to 96.5 million barrels per day (mb/d), on lower Opec and non-Opec output, according to the newly released IEA Oil Market Report (OMR) for March. But production stood 1.8 mb/d above a year earlier, as a slight decline in non-Opec was more than offset by Opec gains. Non-Opec production in 2016 is estimated to fall by 750,000 bpd, to 57.0 million bpd, 100,000 bpd less than foreseen in last month’s Report.
Opec crude oil production eased by 90,000 bpd in February to a still-robust 32.61 million bpd with losses from Iraq, Nigeria and the UAE partly offset by a substantial rise in flows from post-sanctions Iran. Saudi Arabia, Opec’s largest producer, held supplies steady.
Sharp decelerations in demand growth — particularly in the United States and China — pulled global growth down to a one-year low of 1.2 million bpd in the fourth quarter of last year compared with the year earlier, dramatically below the near five-year high of 2.3 million bpd in the previous quarter. A gain of around 1.2 million bpd is forecast for 2016.
OECD commercial inventories gained 20.2 million barrels in January while forward demand cover remained comfortable at 32.7 days. Preliminary data suggest that in February, OECD inventories drew for the first time in a year while volumes of crude held in floating storage increased.
Global refinery throughputs are estimated at 79.1 million bpd in the current quarter, reflecting weak OECD refinery throughput and a shift of peak spring maintenance to this quarter. Annual growth in the fourth quarter of last year fell to below 1 million bpd amid product stock builds and in line with a slowdown in global oil demand growth.
Oil prices rebounded Friday after the International Energy Agency said that after the market’s long rout, there were signs prices may have “bottomed out”.
US benchmark West Texas Intermediate (WTI) for delivery in April rose 66 cents to $38.50 a barrel on the New York Mercantile Exchange.
In London, Brent North Sea crude for May delivery, the European benchmark, rose to $40.39 a barrel, up 34 cents from Thursday’s settlement.
“The market is gravitating to the idea we’re going to see some tightening of the supply and demand fundamentals,” said Gene McGillian of Tradition Energy.
The notion, which emerged last month amid discussions about freezing output led by Saudi Arabia and Russia, picked up steam from the IEA’s new market report Friday.
After a 20-month rout that has shaved prices more than 60 percent since mid-2014, a tentative recovery is underway, it suggested.
“International crude oil prices have recovered remarkably in recent weeks,” the IEA noted in report.
“This should not, however, be taken as a definitive sign that the worst is necessarily over. Even so, there are signs that prices might have bottomed out.”
The IEA said the Saudi-Russian effort to gather producers behind an output freeze a “first stab at coordinated action that is intended to stabilize prices” with the presumed aim of pushing oil up to $50 a barrel.
But the IEA predicted there was a long way to go before oil supply and demand find a real balance, probably in 2017.
In the United States, the Baker Hughes report on active drilling rigs in the country showed another decline, by six rigs, this week, pointing to a continuing fall in production.
Bob Yawger, of Mizuho Securities USA, highlighted the lift from the European Central Bank’s decision Thursday to unleash further stimulus for the ailing eurozone economy. “Free money is always positive for commodities,” he said.
Still, analysts sounded notes of caution because of the persistence of the global glut.
“Last year in the spring we jumped up $20 on this kind of thinking, then when we didn’t see signs that the production dropped off, the market gave it all back,” said McGillian.
