IEA

IEA Less Confident on Oil Rebalancing as OPEC Supply Rises

14 Jul 2017   IEA, Oil Supply

The rebalancing of global oil markets has become less certain, with OPEC production rising and little evidence that bloated stockpiles are shrinking as expected, the IEA says. (Bloomberg) — The rebalancing of global oil markets has become less certain, with OPEC production rising and little evidence that bloated stockpiles are shrinking as expected, the International Energy Agency said. While world demand is climbing faster than initially estimated, OPEC’s implementation of the supply cutbacks needed to clear the inventory surplus has faltered to its lowest level since the group began in January, the Paris-based agency said. That’s a change from two months ago when the IEA said the “ rebalancing is here” and was accelerating in the short term. “We need to wait a little longer to confirm if the process of rebalancing has actually started in the second quarter,” said the IEA, which advises most of the world’s major […]

International Energy Agency OMR

14 Jul 2017   IEA, Oil Supply
  • Global oil supply rose by 720 kb/d in June to 97.46 mb/d as producers opened the taps. Output stood 1.2 mb/d above a year ago with non-OPEC firmly back in growth mode. Non-OPEC production is expected to expand by 0.7 mb/d in 2017 and 1.4 mb/d in 2018.
  • OPEC crude output rose by 340 kb/d in June to 32.6 mb/d after Saudi flows increased and Libya and Nigeria, spared from cuts, pumped at stronger rates. OPEC compliance slumped to 78%, the lowest rate this year, and was overtaken by the non-OPEC group whose rate improved to 82%.
  • For global demand, after lacklustre 1.0 mb/d growth in 1Q17, there was a dramatic acceleration in 2Q17 to 1.5 mb/d. For 2017 as a whole, demand is forecast to reach 98.0 mb/d, with growth revised up by 0.1 mb/d compared to last month’s Report to 1.4 mb/d. Further growth of 1.4 mb/d is foreseen for 2018, with global demand reaching 99.4 mb/d.
  • OECD industry stocks fell in May by 6 mb on lower imports of crude and products. Stocks are now 266 mb above the five-year average, down from 300 mb in April. Preliminary data show a moderate reduction in OECD stocks for June.
  • Benchmark crude oil prices fell by $3-4/bbl on average in June and remain close to their level when the OPEC output deal was announced. Sour crudes such as Dubai, Maya and Urals were all boosted by tight supplies.
  • Global refinery throughput is forecast to reach a record high of 81 mb/d in 3Q17, up 0.8 mb/d from 2Q17 levels.  The US contributes half of the 3Q17 build. Refinery runs will decline seasonally by 1.5 mb/d from the peak August level to October.

IEA: Market Shows Waning Confidence In Oil Rebalancing

14 Jul 2017   IEA, Prices

The rebalancing of the oil market is taking too long, the International Energy Agency (IEA) said in its Oil Market Report on Thursday. Since the record net long position that money managers built in February on hopes that OPEC’s cuts would rebalance the market, investors’—and industry bodies’—confidence has been waning. “Brent prices have closed below $50/bbl each day since early June and few investors expect a recovery anytime soon,” the IEA said. Since the start of the production cuts, some issues have been popping up each month to raise doubts about the rate at which the market is rebalancing, the agency noted, adding: “This month, there are two hitches: a dramatic recovery in oil production from Libya and Nigeria and a lower rate of compliance by OPEC with its own output agreement.” Libya and Nigeria contributed the most to the 393,000-bpd increase in the cartel’s total crude output in […]

Most oil players losing confidence in the market, IEA says

14 Jul 2017   IEA

The dip in oil prices may be in part because of a loss in investor confidence and it’s starting to hit U.S. shale oil profits, the International Energy Agency said. File photo by Gary C. Caskey/UPI July 13 (UPI) — Oil market investors are losing confidence over OPEC’s effort to offset the glut of supplies, though the impact could be hitting U.S. producers, the IEA said. The Organization of Petroleum Exporting Countries and a handful of non-member producers in January started implementing a deal to curb output to offset the supply-side strains that pushed oil prices below $30 per barrel in early 2016. Member states Libya and Nigeria are not participating in the deal so they can steer oil revenue toward national security efforts. Iran is the only member state that has room for production growth so it can regain a market share lost to sanctions. Of the three, […]

Shale Investment Booms, But Global Oil Has A Big Problem

12 Jul 2017   IEA, Oil Supply, Shale Oil

The IEA’s World Energy Investment 2017 report predicts a slight increase in oil and gas investment this year, rising by 3 percent. That comes after a plunge of 44 percent between 2014 and 2016, a steep drop off due to the crash in oil prices. In 2016 alone, spending on oil and gas fell by 26 percent from a year earlier, dropping to $650 billion. This year’s expected increase will halt the slide in spending. However, things are not all well. The only reason the industry might avoid another year of spending contraction is almost entirely due to U.S. shale, which will see investment increase by 53 percent. Investment in the Middle East and Russia is “resilient,” but the global oil industry on the whole is retreating from complex megaprojects that, while expensive, represent consistent sources of supply over the long run. Instead, oil companies are focusing on short-cycle […]

Energy jobs on the decline, but not production, IEA finds

12 Jul 2017   IEA, Oil Supply

Technological advances have led to declines in labor tied to oil and gas with only small impacts on production, the International Energy Agency said. A report from the IEA on overall capital spending in an era where crude oil prices have lingered at historic lows found technological gains are having a clear impact on employment. “In general, technological progress is leading to lower labor intensity across the energy system,” the IEA reported. “For example, a 30 percent drop in jobs in U.S. oil and gas upstream from its peak level in 2014 to its trough in 2016 was accompanied by only a marginal decrease in production.” U.S. oil production has remained robust even as crude oil prices […]

IEA Says Spending in U.S. Shale Drives Global Oil Investment Recovery

11 Jul 2017   IEA, Shale Oil

Global investments in oil and gas fields are likely to rebound modestly this year thanks to a sharp uptick in spending by U.S. shale producers, the International Energy Agency said in a report Tuesday. The 3% increase in fossil-fuel development foreseen by the IEA in 2017 represents a positive note for an industry that went through the longest period of retrenchment on spending in half a century after the oil-price crash…

IEA: improving efficiency of road-freight transport critical to reduce oil-demand growth; three areas of focus

Improving the efficiency of road-freight transport is critical to reducing the growth in oil demand, carbon emissions and air pollution over the next decades, according to the International Energy Agency’s latest report, The Future of Trucks: Implications for energy and the environment . Although trucks are a major contributor to the growth in transport-fuel consumption and emissions, the sector receives far less attention and policy focus than passenger vehicles, the IEA noted. Only four countries have energy-efficiency standards for heavy trucks, compared with some 40 countries with passenger-vehicle standards. Yet the growth in oil demand from trucks has outpaced all other sectors—including passenger cars, aviation, industry and petrochemical feedstocks—since 2000 and contributed 40% to global oil demand growth, a similar contribution as cars. Today, trucks account for almost a fifth of global oil demand, or around 17 million barrels per day—equivalent to the combined oil production of the United […]

Oil supply seen outpacing consumption in 2018, demand to top 100 million barrels per day

15 Jun 2017   IEA

Growth in oil supply next year is expected to outpace an anticipated pick-up in demand that will push global consumption above 100 million barrels per day (bpd) for the first time, the International Energy Agency said on Wednesday. The Paris-based IEA said production outside the Organization of the Petroleum Exporting Countries would grow twice as quickly in 2018 as it will do this year, when OPEC and 11 partner nations have restrained output. “For total non-OPEC production, we expect production to grow by 700,000 bpd this year, but our first outlook for 2018 makes sobering reading for those producers looking to restrain supply,” the IEA said. “In 2018, we expect non-OPEC production to grow by 1.5 million bpd which is slightly more than the expected increase in global demand.” Brent […]

Market balance delayed, International Energy Agency says

15 Jun 2017   IEA

Market balance might be facing headwinds given strong production trends and high levels of oil in storage, the International Energy Agency said. File photo tlegend/Shutterstock. June 14 (UPI) — Pressure from U.S. oil production and some OPEC members mean market balancing is stalled, the International Energy Agency reported Thursday. Parties to an agreement led by the Organization of Petroleum Exporting Countries to balance the market through managed production declines decided to extend the arrangement by three months into early 2018. That led to a downturn in crude oil prices as many market watchers were anticipating deeper cuts. In its monthly market report for June, OPEC economists said Wednesday that the market was balancing in response to the production arrangement, but at a slower pace than expected. The International Energy Agency mirrored OPEC’s sentiments in its own monthly report , saying stronger U.S. crude oil production, which could increase faster […]

Global Oil Consumption Rate Grows

15 Jun 2017   IEA

Global oil consumption grew above the 10-year average rate for a second consecutive year in 2016. Global oil consumption grew above the 10-year average rate for a second consecutive year in 2016, rising by 1.6 percent, or 1.6 million barrels per day, BP’s latest Statistical Review of World Energy revealed. Strong increases in demand were seen from India (up 300,000 bpd) and Europe (up 300,000 bpd) and while demand from China continued to grow (up 400,000 bpd) it was lower than in recent years. Growth in production was limited to only 0.5 percent, which led to the oil market broadly returning back into balance by mid-year. However, prices continued to be depressed by the large overhang of built-up inventories. Natural gas production was also adversely affected by low prices, growing by only 0.3 percent. US gas output fell in 2016, the first reduction since the advent of the shale […]

Oil Prices Fall As IEA Points At Poor Fundamentals

15 Jun 2017   IEA

Oil slumped again on Wednesday on a downbeat assessment from the IEA regarding the health of the oil market. After posting some relatively optimistic projections for the “rebalancing” process in recent months, the IEA has had to concede that the massive inventory overhang might last longer than it originally predicted. The report came in the same week that OPEC published its monthly Oil Market Report, in which it too admitted that the oil market was adjusting at a “slower pace” than expected. The IEA pointed to several different metrics that don’t bode well for higher prices. First, total OECD inventory levels “increased by more than the seasonal norm” in April. Crucially, inventories in the OECD have actually grown year-to-date, despite five months’ worth of OPEC cuts. As a result of rising U.S. shale production, weak gasoline demand, high levels of U.S. imports, and a drop off in exports, U.S. […]

Excess oil inventories to last until 2018 – IEA

14 Jun 2017   IEA, Oil Supply

Oil demand should outpace supply in the second half of this year but excess inventories will persist well into 2018, dealing a blow to global crude producers enacting output cuts to bring down stubbornly high stockpiles. The forecast from the International Energy Agency comes as higher than expected demand growth next year is met by even stronger output from the US and other producers outside of the Opec cartel. In its monthly oil market report, which include forecasts for next year, the Paris-based energy agency said: “[The] outlook for 2018 makes sobering reading for those producers looking to restrain supply.”

World’s energy system not on track to meet climate goals: IEA

6 Jun 2017   IEA, Renewables

Barely one tenth of renewable energy technology is ready to meet long-term climate change targets as governments have failed to adequately support large-scale deployment, a report by the International Energy Agency showed on Tuesday. Under a global climate pact, called the Paris Agreement, nearly 200 countries agreed last year to phase out greenhouse gas emissions this century and to limit a global average rise in temperature to “well below” 2 degrees Celsius (3.6 degrees Fahrenheit). Energy technology innovation can help achieve a cleaner energy system but strong policy signals are needed, the report said. Only three out of 26 assessed technologies – electric vehicles, energy storage and mature variable renewables (solar PV and onshore wind) – are on track to meet climate targets, according to the IEA. “Transformation toward a clean energy system is not in line with stated international policy goals. Many technology areas suffer from a lack […]

IEA says global oil market now close to balance

14 Apr 2017   IEA, Oil Supply

The global oil market is close to balance, after nearly three years of excess supply, as production cuts by top exporters offset a longer-term decline in demand in the richest nations, the International Energy Agency said on Thursday. The agency said oil stocks across the Organisation for Economic Cooperation and Development (OECD) fell by 17.2 million barrels in March, resulting in an increase of 38.5 million barrels, or 425,000 barrels per day (bpd), in the first three months of the year. “The net result is that global stocks might have marginally increased in the first quarter, versus an implied draw of about 0.2 million barrels per day,” the Paris-based IEA said. “It can be argued confidently that the market is already very close to balance, and as more data becomes […]

International Energy Agency OMR

13 Apr 2017   IEA
  • Global demand growth of 1.3 mb/d is forecast for 2017, a second consecutive annual decline and slightly below our prior forecast following weaker than expected 1Q17 demand. Subdued gains in Russia and India, and weaker momentum in OECD countries, were key factors.
  • World oil supply fell by 755 kb/d in March as OPEC and non-OPEC producers pumped less and improved compliance with the output reduction pact. Total non-OPEC output is set to rise again, however, with growth of 485 kb/d expected in 2017, recovering from a decline of 790 kb/d last year.
  • OPEC crude output fell by 365 kb/d in March to 31.68 mb/d, led by losses in Nigeria, Libya – both exempt from supply cuts – and Saudi Arabia. OPEC’s 1Q17 output of 31.9 mb/d was 240 kb/d below the 1Q17 “call” on its crude. The call rises to 32.9 mb/d in 2Q17, which implies global stocks will draw further if OPEC maintains solid adherence to its supply cut.
  • OECD industry stocks drew moderately in February and are forecast to fall further in March. However, due to January’s large build, we estimate OECD stocks gained 38.5 mb (425 kb/d) in 1Q17. Marginal stocks held offshore or in smaller facilities drew by an estimated 325 kb/d during the same period.
  • Crude prices fell more than $3/bbl on average in March, but rose by $5/bbl in early April. Money managers cut their net long positions in crude futures by 200 mb in March amid the price fall. Product prices showed few signs of rallying during the refinery maintenance season.
  • After 1Q17’s almost flat performance vs 1Q16, refinery throughput in 2Q17 will grow 1.15 mb/d y-o-y. Refinery crude demand will surge by 3.5 mb/d between March and July, with most of the increase coming from Atlantic Basin refiners and the Middle East.

Half Time

It is now half time for the six-month oil production cuts agreed by OPEC and eleven non-OPEC countries. So far, the game has gone fairly well for producers. Prices have stabilised again recently after falling by about ten percent in early March, with recent unplanned outages and rising political tension in the Middle East playing a role. For OPEC countries, compliance has been impressive from the start while non-OPEC participants are gradually increasing their compliance rate, although in their case it is harder for analysts to verify the data.

Even at this mid-way point, we can consider what comes next. It is of course OPEC’s business to decide on its output levels, but a consequence of (hypothetically) extending their output cuts beyond the six-month mark would be bigger implied stock draws. This would provide further support to prices, which in turn would offer further encouragement to the US shale oil sector and other producers.

Indeed, although the oil market will likely tighten throughout the year, overall non-OPEC production, not just in the US, will soon be on the rise again. Even after taking into account production cut pledges from the eleven non-OPEC countries, unplanned outages in Canada as well as in the North Sea, we expect production will grow again on a year-on-year basis by May. For the full year, we see growth of 485 kb/d, compared to a decline of 790 kb/d in 2016. The main impetus comes from the US where monthly data shows that output reached 9.0 mb/d in March, up from a trough of 8.6 mb/d in September 2016. We now expect that US production will be 680 kb/d higher at the end of the year than it was at the end of 2016, an upgrade to our previous forecast.

Another factor that could influence the market balance is revised demand growth. We have cut our growth number for 1Q17 by 0.2 mb/d to 1.1 mb/d. New data shows weaker-than-expected growth in a number of countries including Russia, India, several Middle Eastern countries, Korea and the US, where demand has stalled in recent months. After upgrading demand estimates for 2Q17 and cutting it for the second half of the year, we are left with growth for 2017 at 1.3 mb/d rather than the 1.4 mb/d previously forecast.

Looking at observed stocks versus the implied gap between demand and supply; new OECD stocks data for February shows that, set against the conventional measure of the five-year average, they remain about 330 mb above this level. OECD stocks, particularly products, drew by 0.8 mb/d in 4Q16, but we estimate that in 1Q17 they increased by 0.4 mb/d, mainly for crude oil and, in turn mainly in Europe and the US. Outside of the OECD, in the Stocks section of this Report we show that a group of stock centers, including Saldanha Bay, the Caribbean and floating storage have, provisionally, seen stocks fall by 0.3 mb/d in 1Q17. The net result is that global stocks might have marginally increased in 1Q17 versus an implied draw of about 0.2 mb/d. It can be argued confidently that the market is already very close to balance, and as more data becomes available this will become clearer. We have an interesting second half to come.

IEA Says Oil Prices Will Not Jump Sharply, Despite OPEC Supply Cuts

31 Mar 2017   IEA, Prices

The International Energy Agency (IEA) does not expect a major increase in global oil prices despite efforts by OPEC and non-OPEC members to reduce output, its executive director Fatih Birol told Reuters. OPEC and 11 other producers including Russia agreed in December to cut their combined output by almost 1.8 million barrels per day (bpd) in the first half of the year in an effort to eradicate a stubborn supply glut and boost prices. That agreement, which provided an initial boost to crude prices, could be extended for six months, but Birol does not believe that prices would receive a significant boost. “There is a tremendous amount of stock in the markets and to […]

Oil Gains on U.S. Supply as IEA Says Time Needed to Drain Glut

16 Mar 2017   IEA

Oil rebounded above $48 a barrel amid a reported decline in U.S. crude stockpiles as the International Energy Agency said the market needs time to drain a global inventory glut. Futures advanced as much as 2.4 percent in New York after slumping almost 11 percent the previous seven sessions. U.S. inventories fell by 531,000 barrels last week, the industry-funded American Petroleum Institute was said to report. Government data Wednesday is forecast to show stockpiles rose for a 10th week. Oil markets are still struggling to clear a surge in supply from OPEC at the end of last year, according to the International Energy Agency. Oil last week broke below $50 a barrel for the first time since December as rising U.S. supply has swamped the impact of supply reductions from members of the Organization of Petroleum Exporting Countries and 11 other nations that started Jan. 1. While an OPEC […]

Be patient on oil market balance, IEA says

16 Mar 2017   IEA

There’s nothing shocking in the steady build of crude oil inventory levels and those waiting for the market to balance out should be patient, the IEA said. The Organization of Petroleum Exporting Countries started implementing a production deal in January that aimed to correct a market characterized by oversupply. Despite the cap on production, crude oil stockpiles in the world’s leading economies continue to build up, suggesting some pressures from the glut remain. A report from the International Energy Agency stated the buildup in the level of unabsorbed crude oil should not be surprising considering OPEC members were increasing their production “relentlessly” before the deal was reached in November. “Export volumes are still appearing in storage around the world and, as part of this, U.S. stocks are building,” the IEA’s report read. For the United States, the world’s leading economy, it’s seen a “triple surge” […]

International Energy Agency Oil Market Report

16 Mar 2017   IEA
  • Having expanded by 1.6 mb/d in 2016, global oil product demand growth is expected to ease back to 1.4 mb/d in 2017. Early indicators of 1Q17 demand support this, with slowdowns seen in January in Japan, Germany, Korea and India.
  • Global oil supplies rose 260 kb/d in February as OPEC and non-OPEC producers pumped more.At 96.52 mb/d, world oil production stood 170 kb/d below a year ago. OPEC posted a year-on-year decline for the second month running. In 2017 non-OPEC output is set to rise 0.4 mb/d to 58.1 mb/d.
  • OPEC crude output rose by 170 kb/d in February to 32 mb/d, putting compliance with the group’s supply cut at 91% for the month. Saudi Arabia raised output by 180 kb/d month-on-month, but flows remained below its agreed target.
  • OECD commercial inventories rose in January for the first time in six months by 48 mb, or 1.5 mb/d, to 3 030 mb, underpinned by near-record US crude stocks and gains in Europe. Preliminary data show a modest draw of 5 mb in February despite further builds in US crude.
  • Benchmark crude prices moved in a tight range of $55-56/bbl through February, before falling more than $3/bbl on 8-9 March. Sour crude Dubai maintained the gains achieved against Brent in recent months, while middle distillates and gasoline prices rose in most regions.
  • Refinery throughput growth recovered to 0.9 mb/d y-o-y in 4Q16, but will slow down to a 0.6 mb/d increase in 1Q17, before surging by 1.9 mb/d in 2Q17. This reflects a recovery from 2Q16’s unusually low levels, with implied refined product stock drawdowns supporting higher throughput.

IEA Claims The OPEC Deal Is Working

16 Mar 2017   IEA

OPEC’s relentless output increase before their November deal to curtail supply has led to the first global stocks increase in six months, the International Energy Agency (IEA) said on Wednesday, noting that the market needs time to see a significant drawdown, expecting an implied deficit of 500,000 bpd for the first half at current production levels and supply and demand fundamentals. According to IEA data, total OECD oil stock levels confirm the legacy of higher production at the end of last year. Global inventories had started falling in August from record high levels, and by end-December they had dropped by 120 million barrels, an average decline of almost 800,000 bpd, IEA said. “However, in January we saw an abrupt about turn with OECD stocks increasing by 48 mb (1.5 mb/d) and preliminary data for February suggests they have fallen back again only modestly,” the agency noted. Export volumes are […]

Global oil stocks rise, but IEA says OPEC curbs may create H1 deficit

15 Mar 2017   IEA, Oil Supply, OPEC

Global oil inventories rose for the first time in six months in January, despite OPEC’s production cuts, but if the group maintains its output limits, the market may tilt into deficit in the first half of 2017, the International Energy Agency said on Wednesday. The IEA said crude stocks in the world’s richest nations rose in January for the first time since July by 48 million barrels to 3.03 billion barrels. “The actual build in OECD stocks in January reminds us that it may be some time before global stocks start to fall,” the agency said. Compliance by the Organization of the Petroleum Exporting Countries with its agreed output cut of 1.2 million barrels per day in the first half of this year […]

Oil Majors To Boost Production As IEA Warns Of Supply Deficit

Oil prices traded sideways in a quiet market as traders digest the news coming from Houston where the world’s opinion leaders in oil & gas have gathered for this year’s CERA Week. (Click to enlarge) (Click to enlarge) Chart of the Week (Click to enlarge) • Total installed wind capacity surpassed hydropower in the U.S. for the first time last year. • Hydro has been a pillar of the U.S. electricity system for decades – not as large a share of the sector as coal, natural gas or nuclear, but hydro has held a sizable share since the post-WWII build out in the 1940s and 1950s. • On February 12, in the Southwest Power Pool, which covers North Dakota down to Northern Texas, wind accounted for half of the entire system’s generation, the first time that has occurred in one of the seven regional transmission organizations (RTOs). Market Movers […]

IEA warns of potential shortage of global oil supplies in 3 years

8 Mar 2017   IEA, Oil Supply

The recent drop in oil industry investment brought on by weak prices threatens to significantly slow supply growth in the long term, and could lead to a shortage when it comes to meeting global demand, the International Energy Agency said in its five-year oil market forecast released Monday. That may happen even as crude stockpiles in the U.S. and elsewhere climb over the next few years, the IEA said in its “Oil 2017” report. “If the record two-year investment slump of 2015 and 2016 is not reversed,” supply growth may stall by 2020, it said, pointing out that global oil and gas upstream, or exploration and production, investment fell by 25% in 2015 and by another 26% in 2016. This year, it’s “evident” that under the Organization of the Petroleum Exporting Countries-led production cut agreement, output reductions are taking place just as production from the non-OPEC sector, led by […]

IEA: Huge Oil Price Spike Inevitable

8 Mar 2017   IEA, Oil Supply, Prices

Three years of drastic cuts to upstream spending because of the meltdown in oil prices could result in a shortage of oil supply in a few years, according to a new report from the International Energy Agency. When oil prices collapsed in 2014, oil producers quickly took an ax to their spending. Global oil and gas investment dropped by a quarter in 2015 and by an additional 26 percent last year, the IEA estimates. A long list of projects, particularly very large ones, were put on ice. Because many of these projects take years to develop, the sharp slowdown between 2014 and 2016 could result in very few sources of new supply hitting the market towards the end of the decade. To be sure, supply is already coming back. The U.S. has added more than 500,000 bpd since last summer, and shale drillers are ramping up activity. The IEA […]

IEA Sees Oil Investment Revival After a Two-Year Rout

7 Mar 2017   IEA, Oil Supply

Oil companies are reviving investment after a two-year rout as OPEC output cuts boost prices, easing but not eliminating the risk of a future supply crunch, the International Energy Agency said. There are “signs of a modest recovery” in spending in 2017 following two years of big investment cuts, the Paris-based agency said Monday in a report. The IEA doubled forecasts for production growth outside OPEC next year as U.S. shale producers emerge “leaner and fitter” from the downturn. The Organization of Petroleum Exporting Countries and Russia headed an agreement among 24 oil producers last year to clear a global glut, spurring a 20 percent rally in crude prices. Before that decision, OPEC had refused to reduce output on the grounds that any curbs would bail out rival producers. “Until the agreement was struck, prices threatened to return to the levels seen in early 2016” of less than $30 […]

IEA: Oil investment drought threatens price surge

7 Mar 2017   IEA

Drastic cuts in oil industry investment risk creating a shortfall in supply that by 2020 will expose the market to a surge in prices, the International Energy Agency has warned. Despite a chorus of analysts predicting a decline in oil consumption in the coming years, as governments push for energy efficiencies, cleaner fuel usage and electric cars, the IEA cautioned in its five-year outlook: “We see no such peak in sight.” More investment in global oil and gas exploration and production is crucial to ensure future supplies are able to meet growing demand, it added. The oil price crash that sent prices from $115 in 2014 to below $30 early last year forced international energy companies to curb investment by a quarter in 2015, and by a similar amount last year. The Paris-based agency said only modest signs of recovery in 2017 meant that it was far from clear that enough projects would enter the pipeline in the next few years to avoid a supply crunch.

IEA warns of oil ‘supply crunch’ by 2020 with no capex renaissance

7 Mar 2017   IEA

Global oil supply may struggle to match demand after 2020, when the pinch of a two-year decline in investment in new production could leave spare capacity at a 14-year low and send prices sharply higher, the International Energy Agency said on Monday. Investors generally are not betting on a sharp rise in the price of crude oil any time soon, but the contraction in global spending in 2015 and 2016 and growing global demand means the world could well face a “supply crunch” if new projects are not soon given the go-ahead, the IEA said in its five-year “Oil 2017” market analysis and forecast report. Most supply growth is expected to come from the United States, where the IEA said shale, or light tight output (LTO), will grow by 1.4 million barrels per day by […]

IEA: Oil investment drought threatens price surge

7 Mar 2017   IEA

Drastic cuts in oil industry investment risk creating a shortfall in supply that by 2020 will expose the market to a surge in prices, the International Energy Agency has warned. Despite a chorus of analysts predicting a decline in oil consumption in the coming years, as governments push for energy efficiencies, cleaner fuel usage and electric cars, the IEA cautioned in its five-year outlook: “We see no such peak in sight.” More investment in global oil and gas exploration and production is crucial to ensure future supplies are able to meet growing demand, it added. The oil price crash that sent prices from $115 in 2014 to below $30 early last year forced international energy companies to curb investment by a quarter in 2015, and by a similar amount last year. The Paris-based agency said only modest signs of recovery in 2017 meant that it was far from clear that enough projects would enter the pipeline in the next few years to avoid a supply crunch. “We see significant risk of prices rising sharply by 2022, unless a significant amount of new projects are sanctioned and sanctioned quickly,” Fatih Birol, executive director of the IEA said at the CERAWeek energy conference in Houston.

IEA Tracks 40 Percent Compliance Rate For Non-OPEC Deal Participants

11 Feb 2017   IEA

Two anonymous OPEC sources say that eleven of the non-OPEC nations that are part of the oil output reduction deal struck at the end of November have only made 40 percent of promised cuts, according to Reuters . The report said the sources cited numbers found in data published by the International Energy Agency. The IEA’s numbers Friday morning showed that OPEC’s supply-cut deal achieved a greater level of success—a record internal initial compliance rate of 90 percent . The Organization of Petroleum Exporting Countries (OPEC) said its members had made 92 percent of expected cuts, data released the same day showed. OPEC, Russia and other oil producers aimed to curb output by 1.8 million barrels per day during the first six months of the new year in an effort to rid global markets of a price-crashing supply glut. Part of the issue with the low compliance from outside […]

IEA says record OPEC cut compliance helps oil market rebalance

10 Feb 2017   IEA

A worker checks the valves at Al-Sheiba oil refinery in the southern Iraq city of Basra, January 26, 2016. REUTERS/Essam Al-Sudani/File Photo Global oil output plunged in January as OPEC and non-OPEC producers curbed supply to accelerate a market rebalancing following one of the largest oil gluts in a generation, the International Energy Agency said on Friday. Oil supplies fell by around 1.5 million barrels per day last month, including by 1 million bpd for OPEC, leading to record initial compliance of 90 percent with a six-month output-cut deal reached in December by big producers to boost prices. “Some producers, notably Saudi Arabia, (are) appearing to cut by more than required. This first cut is certainly one of the deepest in the history of OPEC output cut initiatives,” the IEA, which advises industrial nations on energy policy, said. The Paris-based IEA said if the January level of compliance were […]

International Energy Agency Oil Market Report

10 Feb 2017   IEA
  • Supported by strong 4Q16 numbers,the estimate for global oil demand growth for 2016 was revised up for the third consecutive month to 1.6 mb/d. Although still forecast to decelerate in 2017 to 1.4 mb/d, recent improvements in industrial activity are providing support.
  • Global oil supplies plunged nearly 1.5 mb/d in January, with both OPEC and non-OPEC countries producing less. At 96.4 mb/d, world oil production stood 730 kb/d below a year ago, with OPEC posting its first year-on-year (y-o-y) decline since early 2015.
  • OPEC crude production fell by 1 mb/d to 32.06 mb/d in January, leading to record initial compliance of 90% with the output agreement. Some producers, including Saudi Arabia, cut supply by more than required. Lower production was partly offset by higher flows from Libya and Nigeria, which are exempt from cuts.
  • After falling by 0.8 mb/d last year, non-OPEC output will grow by 0.4 mb/d in 2017.Growth is mainly in the Americas, where higher prices are fuelling increased investments in US LTO activity and long lead-time projects are coming on stream in Brazil and Canada.
  • OECD total oil stocks fell nearly 800 kb/d in 4Q16, the largest fall in three years.End-December inventories were below 3 000 mb for the first time since December 2015. Stocks continued to build in China and other emerging economies and volumes of oil at sea also increased.
  • Front-month Brent futures gained by a modest $0.59/bbl to $55.51/bbl in January as traders awaited news of OPEC cuts. The Brent contango narrowed, while sour benchmark Dubai continued to rise versus Brent and WTI. Gasoline, LPG and naphtha cracks increased.
  • 4Q16 refinery runs were stronger on more solid product demand, with runs up 830 kb/d y-o-y, after modest growth of 160 kb/d in 3Q16. This brought 2016 average throughput growth to 465 kb/d. 1Q17 refinery runs are forecast to grow 200 kb/d y-o-y.

Oil Jumps as IEA Sees Record OPEC Cuts Compliance, Rising Demand

10 Feb 2017   IEA, OPEC

Oil jumped as the International Energy Agency said OPEC had achieved record initial compliance of 90 percent with their cuts agreement, while demand grew faster than expected. Futures gained as much as 1.1 percent in New York. In the first month of the Organization of Petroleum Exporting Countries’ agreement, key member Saudi Arabia reduced production by even more than it had committed , while higher demand is aiding the group’s bid to re-balance world markets, the IEA said. Oil has fluctuated above $50 a barrel since a deal to trim output between OPEC and 11 other nations took effect on Jan. 1. U.S. producers are taking advantage of higher prices by increasing drilling activity and boosting daily output to the highest level since April, a dynamic the IEA said is capping prices in the mid-$50s. “The key question for the oil market is how long OPEC can sustain this […]

IEA Says OPEC Reaches Record Compliance With Agreed Cuts

10 Feb 2017   IEA, OPEC

OPEC members have reached a record compliance of 90% with their agreed output cuts, the International Energy Agency said Friday. The Organization of the Petroleum Exporting Countries on Nov. 30 agreed to cut its production from January by 1.2 million barrels a day to end a persistent oil glut. In December, Russia and other producers outside the group committed to take 558,000 b/d out of the market. In its closely watched…

IEA does not foresee oil demand peaking soon, Birol says

8 Feb 2017   IEA, Oil Supply

The International Energy Agency (IEA) does not expects oil demand to peak any time soon due to rising consumption in developing economies, Director Fatih Birol said on Monday. Birol also warned that oil markets could enter a period of high volatility unless companies develop new projects after two years of sharp drops in investments sparked by low oil prices. “We do not see in the near and medium terms oil products can be substituted by other fuels. More than one third of growth comes from trucks in developing Asia… We do not subscribe to oil demand peaking anytime soon,” Birol said at the GE Oil and Gas annual meeting in Florence, Italy. “If there are no major new major projects this year, it will be very […]

IEA does not foresee oil demand peaking soon, Birol says

30 Jan 2017   IEA

The International Energy Agency (IEA) does not expects oil demand to peak any time soon due to rising consumption in developing economies, Director Fatih Birol said on Monday. Birol also warned that oil markets could enter a period of high volatility unless companies develop new projects after two years of sharp drops in investments sparked by low oil prices. “We do not see in the near and medium terms oil products can be substituted by other fuels. More than one third of growth comes from trucks in developing Asia… We do not subscribe to oil demand peaking anytime soon,” Birol said at the GE Oil and Gas annual meeting in Florence, Italy. “If there are no major new major projects this year, it will be very […]

International Energy Agency Monthly Oil Market Report

20 Jan 2017   IEA
  • The global demand outlook for 2016 has been raised following the release of robust preliminary 4Q16 numbers. Colder weather in northern Europe provided impetus as did rapid industrially-driven Asian growth. Global oil demand growth for 2016 is now expected to be 1.5 mb/d, slowing to 1.3 mb/d in 2017 as product prices potentially rise.
  • Global oil supplies fell by more than 0.6 mb/d in December, to 97.6 mb/d on lower OPEC and non-OPEC output. For 2016, world supply was up 0.3 mb/d from the previous year as record OPEC output more than offset a 0.9 mb/d decline in non-OPEC.
  • OPEC crude production, now excluding Indonesia, fell 320 kb/d from record rates to 33.09 mb/d in December after lower Saudi output and disruptions in Nigeria curbed supply. Early indications suggest a deeper OPEC reduction may be under way for January, as Saudi Arabia and its neighbours enforce supply cuts.
  • Non-OPEC supplies are forecast to grow by 385 kb/d in 2017, as higher prices in the wake of an anticipated coordinated supply cut stimulate increased investment in the US. Recovering LTO production underpins a 320 kb/d gain in total US output this year.
  • OECD industry stocks fell across crude and oil products in November, marking a fourth consecutive monthly decline. Taking into account preliminary data for December, stocks are 82 mb below July’s historical peak, even if for now they remain above the symbolic 3 000 mb level.
  • Oil prices rose in early December and stayed within a $53-57/bbl range thereafter. Dubai, after weakening initially, gained versus other benchmarks due to lower expected OPEC output, opening the arbitrage to Asia for Brent and WTI-linked crudes. Fuel oil was a strong performer due to supply shortages.
  • Higher estimates for 4Q16 global refinery crude throughput – up by 160 kb/d – were partly responsible for a 260 kb/d downward revision for 1Q17. Our analysis of refined product stocks movements shows a 4Q16 build in the OECD, with the overhang in non-OECD implied refined product inventories persisting.

Oil Settles Higher After IEA Says OPEC Cuts on Track

20 Jan 2017   IEA, OPEC

Oil prices rose Thursday after the International Energy Agency’s monthly report suggested global oversupply is easing. The Paris-based IEA said production from the Organization of the Petroleum Exporting Countries was falling and inventories in big consumer countries have been draining. Bulls highlighted this information in pushing for higher prices, but the IEA warned that gains could be offset by expansion outside of OPEC,…

IEA Sees U.S. Shale Oil Output Rising Next Year Amid Price Rally

14 Dec 2016   IEA

U.S. shale oil production is set to rise next year following the rally in prices since OPEC’s Nov. 30 meeting in Vienna, according to the International Energy Agency, which had predicted a decline in its previous report. “U.S. LTO is expected to continue to decline through the end of the year before rising marginally over 2017,” the IEA said, referring to light tight oil, a synonym for shale oil. In November, the agency forecast shale-oil output would decline by about 200,000 barrels a day next year, following a half a million barrel-a-day decline in 2016. With the rally in oil prices following OPEC’s deal with other producers including Russia to slash output from January by almost 1.8 million barrels a day, “activity in the U.S. shale patch is expected to increase in the coming months,” the IEA said. The agency notes […]

OPEC Deal Will Create Oil-Supply Deficit in First Half, IEA Says

13 Dec 2016   IEA, OPEC

Global oil markets will swing from surplus to deficit in the first half of 2017 as OPEC and other producers follow through on an agreement to cut supply, according to the International Energy Agency. 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. Oil has gained more than 16 percent since the Organization of Petroleum Exporting Countries agreed on Nov. 30 to trim output for the first time in eight years, an accord expanded on Dec. 10 with the participation of 11 non-members including Russia and Kazakhstan. “Before the agreement among producers, our demand and supply numbers […]

International Energy Agency Oil Market Report

12 Dec 2016   IEA, Oil Supply
  • Global oil supply rose 0.8 mb/d in October to 97.8 mb/d after producers in OPEC and non-OPEC opened the taps. World oil output was 0.8 mb/d above a year ago, with higher OPEC supply offsetting non-OPEC declines. After declining by 0.9 mb/d in 2016, non-OPEC production is expected to grow by 0.5 mb/d next year.
  • OPEC crude output rose by 230 kb/d to a record 33.83 mb/d in October after production recovered in Nigeria and Libya and flows from Iraq hit an all-time high. Output from the group’s 14 members has climbed for five months running, led by Iraq and Saudi Arabia. In October, OPEC supply stood nearly 1.3 mb/d above a year ago.
  • Oil demand growth is forecast to ease to 1.2 mb/d in 2016 due to sharp slowdowns in the OECD Americas and China. A similar expansion is foreseen in 2017. Oil demand peaked at a five-year high of 1.8 mb/d in 2015.
  • OECD commercial stocks fell for the second month in a row in September, by 17.1 mb to 3 068 mb. In China, stocks of crude built by 29.7 mb in September. Initial data point to renewed crude stock builds in the US and Japan. Stock builds could continue through 2017 if OPEC does not agree to production restraint at its forthcoming meeting in Vienna.
  • Global refinery runs are expected to fall by a seasonal 1 mb/d in 4Q16 to 78.9 mb/d, up 150 kb/d year-on-year (y-o-y).Annual growth of 270 kb/d for 2016 is the lowest increase in more than a decade.
  • Benchmark crude prices followed a bell-shaped curve in October, rising in the first part of the month before erasing nearly all of those gains on doubts about the likelihood of an OPEC production agreement. At the time of writing, front-month ICE Brent was trading at $46.79/bbl.

IEA Chief Expects OPEC Deal To Work

7 Dec 2016   IEA, OPEC

Fatih Birol Fatih Birol, the executive director of the International Energy Agency, expects oil’s fundamentals to regain balance soon, thanks to the output cut deal agreed by OPEC last week. His opinion goes counter to observers who suspect OPEC members are likely to cheat in their compliance with new output targets, including Saudi Arabia’s former Oil Minister Ali al-Naimi. Speaking to Reuters, Birol reiterated IEA’s earlier forecast that supply and demand for crude oil were unlikely to rebalance until the end of 2017 but added that now, with OPEC’s agreement, this could happen much sooner. In early November, the international authority warned in its monthly Oil Market Report that unless OPEC cut production soon, the world will continue to choke on oil. The figures that IEA cited in the report had OPEC production at 33.83 million bpd in October, up by 230,000 bpd from the previous month. As per […]

IEA’s Birol sees oil market rebalancing well before end-2017

6 Dec 2016   IEA

The balance of supply and demand in global oil markets may soon change as a result of OPEC’s decision to cut production, International Energy Agency chief Fatih Birol said on Tuesday. “We had been expecting before the OPEC meeting a rebalancing of the market towards the end of 2017, but with this decision it implemented we may well see it happen significantly earlier,” Birol told Reuters on the sidelines of an industry conference. (Reporting by Stine Jacobsen, editing by Terje Solsvik)

World Energy Outlook 2016 – Fatih Birol in Brussels

6 Dec 2016   IEA

Two days later on 18 November, Fatih Birol presented WEO-2016 at the Centre for Strategic and International Studies in Washington. On 21 November it was the turn of the Friends of Europe in Brussels to host Dr Birol’s presentation. Birol’s journal continued then to Japan and many other nations. WEO-2016 is a weighty tome and there are few such books that receive this degree of attention. An invitation made it possible for me to participate in the Brussels meeting. I also had the opportunity to download the tome-like WEO-2016 report that, according to Birol, is focussed on renewable energy. The report’s subtitle, ”Energy-Mix for the Post-COP21 World” indicates that the Paris climate treaty is a central theme. I prepared for the Brussels meeting by studying in detail Chapter 3 of the report, […]

Oil Price Hike From OPEC Deal May Snuff Itself Out, IEA Says

24 Nov 2016   IEA, OPEC, Prices

An oil price surge triggered by a successful OPEC agreement to cut production could be snuffed out as supply surges back, according to the head of International Energy Agency. If OPEC members agree to limit supplies at their meeting next week, prices could rise to $60 a barrel and trigger a jump in global output, particularly from U.S. shale producers, Fatih Birol, executive director of the Paris-based IEA, said during an interview with Bloomberg Television. The output boom could put downward pressure on prices again within nine months to a year, he said. Brent crude, the global benchmark, has rebounded about 10 percent from a three-month low earlier this month to trade near $50 a barrel in the run up to the Nov. 30 meeting by Organization of Petroleum Exporting Countries in Vienna, where ministers will try to implement supply curbs first outlined in late September. Futures traded at […]

IEA expects U.S. shale output rise if OPEC pushes oil to $60

18 Nov 2016   IEA, Shale Oil

U.S. shale oil producers will increase their output if oil prices hit $60 a barrel, meaning OPEC will have to walk a fine line if it curtails production to prop up prices, the head of the International Energy Agency (IEA) said. OPEC members are due to meet in Vienna at the end of the month to push through the first output limiting deal since 2008. “If this decision pushes the prices up (to) around $60 dollars, we may well see a significant increase from shale oil from the U.S.,” Fatih Birol told Reuters on Wednesday. He said this level would be enough for many U.S. shale companies to restart stalled production, although it would take around nine months for the new supply to reach the market. Low prices have led to two consecutive years of falling investment in upstream oil and gas investments, a pattern Birol expects to continue […]

IEA Sees Oil Price Shock Ahead As Conventional Supply Falls

17 Nov 2016   IEA

Oil Pumps If the oil industry’s upstream investments continue to be lower next year, there is a material risk that the world could end up with a shortage in new conventional supply in a few years, the International Energy Agency (IEA) said in its annual World Energy Outlook on Wednesday. The usual concerns about oil and gas supply persist and are now further aggravated by the record drops in investment, the IEA said in its World Energy Outlook 2016 report, in which it also predicts that the global energy scene would see broad transformations until 2040. In the longer run, investment in the oil and gas industry would be essential for keeping up with demand and replacing declining output. However, the growth of renewables and the increased energy efficiency would lead to lower oil and gas imports in many countries, the IEA said. Nevertheless, according to the WEO-2016, the […]

Norway’s DNO signs oil agreement with Iran

17 Nov 2016   IEA

Norwegian oil and gas company DNO said Wednesday it signed a memorandum of understanding to examine oil field development in Iran. DNO signed an agreement with the National Iranian Oil Company to examine the possibilities for the development of the western Changuleh oil field. The Norwegian company estimates Changuleh holds more than 2 billion barrels of oil in place. Bjorn Dale, the company’s managing director, said a strong presence in neighboring Iraq meant Iran was a good match for DNO. “Iran presents an obvious and exciting next step in expanding DNO’s footprint in the region,” he said in a statement. The field, near the border with Iraq, was discovered in the late 1990s but never developed. The NIOC said development […]

Oil demand won’t peak before 2040, despite Paris deal: IEA

16 Nov 2016   IEA, Peak Oil

The International Energy Agency expects global oil consumption to peak no sooner than 2040, leaving its long-term forecasts for supply and demand unchanged despite the 2015 Paris Climate Change Agreement entering into force. The Paris accord to cut harmful emissions seeks to wean the world economy off fossil fuels in the second half of the century in an effort to limit the rise in average world temperatures to “well below” 2 degrees Celsius (3.6 Fahrenheit) above pre-industrial times. But while demand for oil to power passenger cars, for example, may drop, other sectors may offset this fall. “The difficulty of finding alternatives to oil in road freight, aviation and petrochemicals means that, up to 2040, the growth in these three sectors alone is greater than the growth in global oil demand,” the […]

Carbon capture necessary, IEA says

16 Nov 2016   Environment, IEA

Carbon capture and storage likely the only real way to cut emissions from power plants, the International Energy Agency says. File photo by Stephen Shaver/UPI PARIS, Nov. 15 (UPI) — Momentum needs to build up behind carbon capture and storage technologies in order to put weight behind the Paris climate deal, the director of the IEA said. In a 2013 study, the International Energy Agency described carbon capture and storage as a “necessary addition” to other low-carbon energy technologies meant to drive down global greenhouse gas emissions. The process involves capturing carbon dioxide from sources like power plants and storing it in such a way that it won’t enter the atmosphere. From the IEA’s position, the process is “the only technology” that can significantly reduce emissions from coal-fired power plants and “one of the few” that can cut pollution from industrial processes like steel production. Natural Resources Canada and […]