Global oil glut set to last at least until mid-2017

The IEA said demand growth was slowing while supply was rising, meaning the glut was now due to linger “at least through the first half of next year”. The Paris-based organisation had earlier seen the oil oversupply disappearing in the latter part of 2016. The timing of the world oil market’s return to balance is “the big question,” the IEA said in its monthly report, adding that current prices – above USD 45 – would suggest supply falling and strong demand growth.  “However, the opposite now seems to be happening,” it said. 

“Demand growth is slowing and supply is rising.” The trend may fuel speculation of a possible production freeze – aimed at supporting prices – being agreed between OPEC and non-OPEC member Russia at a meeting in Algeria later this month. China and India, which had been key drivers of demand growth, are “wobbling,” it said, while a slowdown in the US and economic concerns in developing countries have also contributed to the surprise development. 

Oil demand is now expected to grow by 1.3 million barrels per day (mb/d) in 2016, to 96.1 mb/d, from its original forecast of 1.4 mb/d growth. The IEA trimmed its demand growth forecast for 2017 by 200,000 barrels per day, to 97.3 mb/d.