IEA sees US oil surplus weighing on global prices
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OIL prices might have stabilized only temporarily because the global oil glut is worsening and US production shows no sign of slowing, the International Energy Agency said yesterday.
The West’s energy watchdog said the United States may soon run out of spare capacity to store crude, which would put additional downward pressure on prices. That process would last at least until the second half of 2015, when growth in US oil production is expected to start abating.
Combined with an increase in global demand, the expected US production slowdown would give some support to oil prices and respite to oil producers’ group OPEC (Organization of the Petroleum Exporting Countries), the IEA said.
“On the face of it, the oil price appears to be stabilizing. What a precarious balance it is, however,” the Paris-based IEA said in its monthly report. “Behind the facade of stability, the rebalancing triggered by the price collapse has yet to run its course, and it might be overly optimistic to expect it to proceed smoothly.”
The IEA said steep drops in the US rig count have been a key driver of the recent price rebound, which saw Brent crude rising to US$60 per barrel after falling as low as US$46 in January from last year’s peaks of US$115.
“Yet US supply so far shows precious little sign of slowing down. Quite to the contrary, it continues to defy expectations,” the IEA said.
In February, non-OPEC output was estimated to have risen by about 270,000 barrels per day on a month-on-month basis to 57.3 million bpd, led by higher output in North America.
Global supply rose by 1.3 million bpd annually to an estimated 94 million bpd in February, led by a 1.4-million-bpd gain for non-OPEC producers.
US crude stocks soared due to output growth and plunging crude refinery throughput, with seasonal and unplanned refinery outages, weak margins and high gasoline stock builds.
At last count, US crude stocks stood at a record 468 million barrels, the IEA said.
“US stocks may soon test storage capacity limits. That would inevitably lead to renewed price weakness,” the IEA said.
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