“We think rebalancing is going on and going on”, said the director of the oil industry and markets unit at the IEA, Neal Atkinson. “We may not see a return to deficits in the first quarter of 2017, but this report confirms our message that rebalancing is actually there and that it is accelerating at least in the short term”, added he.
Global oil markets are set to strike a balance between supply and demand in 2017, the agency predicts, with supply shortages expected to expand more rapidly in the near future.
Experts say growth in global demand will slow for a second consecutive year. However, they warn that even if OPEC’s contraction of the mining industry is prolonged, there is still a lot to be done in the second half of 2017 to shrink reserves close to the 5-year average.
“This is a scenario, not a forecast, and if the current cuts in OPEC yield are extended by the end of 2017, oil reserves will begin to fall sharply. But as they fall from such high levels, they will not be able to reach the 5-year average for a long time, this may not be the case this year”, said Neal Atkinson.
OPEC seems to extend the deal to reduce yields beyond the end of June, during the cartel meeting on May 25th.
On Monday, Saudi Arabia and Russia have expressed unanimity that the yield is still to be cut, and according to the energy ministers of the two countries, the agreement should be in place by the end of March 2018.
According to IEA, global demand growth will be 1.3 million barrels per day in 2017, which is unchanged from the April report. Again, the agency says oil investors are lower than expected in the first three months of the year.