Oil Demand Growth Seen Slowing for a Second Year

Oil Demand Growth Seen Slowing for a Second Year

Oil Demand Growth Seen Slowing for a Second Year

The IEA said it expects demand to increase by just 1.3 million barrels a day in 2017, rising to a total of about 97.9 million barrels a day.

It now predicts that global demand will only grow by 1.3mb/d over 2017, down from the 1.4mb/d previously forecast.

But oil at above Dollars 50 a barrel has, in turn, attracted higher-cost producers in the United States back to the market, and frantic American drilling will push non-OPEC supply to surprisingly high levels throughout the year, the IEA predicted.

As with Wednesday's report from Opec in Vienna, the IEA sees the USA as the main contributor to net growth this year of almost 500,000 bpd after a dip last year of almost 800,000 bpd, with the U.S. expected to raise production by 680,000 bpd.

"The main impetus comes from the United States, where monthly data shows that output reached 9 million barrels per day in March, up from a trough of 8.6 million barrels per day in September 2016", said the IEA.

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Brent for June settlement climbed 3 cents to $US55.89 a barrel on the London-based ICE Futures Europe exchange. OPEC and other producers, including Russian Federation, agreed late in November to curb output by around 1.8 million barrels per day in the first half of 2017 to rein in oversupply.

But the IEA underlined the dilemma the group faces.

Still, the IEA said, global oil supply and demand appear to be rebalancing after more than two years of oversupply.

OPEC agreed to slash the output by 1.2 million barrels per day from January 1, with top exporter Saudi Arabia cutting as much as 486,000 barrels per day.

With 390,000 bpd lower output from non-Opec - including an unplanned outage in Canada and lower North Sea shipments - the total drop in world supply last month was 755,000 bpd, the IEA estimates.

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Even at this mid-way point, we can consider what comes next.

The combination of factors could keep a lid on oil prices, which have risen in the past six months after a three-year slump.

Still, independent analysts see cause for optimism.

The agency said oil stocks across industrialized nations fell by 17.2 million barrels in March, resulting in an increase of 38.5 million barrels, or 425,000 barrels per day, in the first three months of the year. "If this is true, crude can not be far behind".

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