The International Energy Agency says the world oil market appears to be rebalancing, despite lower-than-expected demand in the first part of the year.
“Rebalancing is essentially here and, in the short term at least, is accelerating,” the IEA declared in its latest monthly oil market report, which comes nine days before the May 25 Opec meeting, when the member countries and their outside partners will decide what steps they need to take next to keep that rebalancing on track.
The IEA, a Paris-based energy watchdog for consumer countries, said that Opec and its 11 supporting non-member countries, led by Russia, have been complying fairly well with their deal but noted that the US oil sector has rebounded strongly, while Libya and Nigeria, exempt from Opec’s deal, have also shown strong improvement.
The agency said it is sticking with its forecast for demand to grow by 1.3 million barrels per day, to 97.9 million bpd, over the whole year, despite lower-than-expected demand so far this year. It warns, however, that even with better demand and continued supply restraint, absorbing the enormous glut of oil will be slow going.
“The IEA gave a pretty cautious endorsement of the effectiveness of Opec’s production cuts, anticipating that global inventories would start to see draws from the second quarter onward,” said Ed Bell, the head of commodities research at Emirates NBD bank in Dubai. “But getting inventories close to their five-year average is doubtful with the current scale of Opec’s limited output.”
Demand in the US was particularly disappointing early this year, according to the report, with February demand down 500,000 bpd on the previous year at 19.2 million bpd.
Other poorly performing major oil markets include Germany, Turkey and India, with the latter a big let-down for oil sellers as their hopes have been pinned on the subcontinent to take over from China as the biggest single source of oil demand growth over the next few years.
The IEA said the effects are still being felt of India’s demonitisation policy, where the government bungled its attempt earlier this year to take cash out of the economy – to curb the black market, among other things – thus hurting demand across a number of sectors, including oil products.
China compensated for most of the weakness in the US in the first quarter and is expected to continue to be one of the main growth stories this year, with “robust economic activity and continued expansions in the petrochemical sector [meaning] China [will] account for roughly one-third of global oil demand growth” this year, the IEA reckons.
Furthermore, it is banking on demand coming back strong in India later this year, so that China and India together will account for three quarters of world demand growth for the year.
The IEA is also looking for a sharp upturn in refinery crude runs to make up for slower demand early on this year. “Starting in March, refinery activity is building up and by July global crude throughputs will have increased by 2.7 million bpd,” the IEA predicts.
On the supply side, it noted the continued surprisingly strong performance in the US. After bottoming out last September, output there increased by nearly 465,000 bpd to the end of February to more than 9 million bpd, it’s highest in a year. The IEA now expects US output to increase by 790,000 bpd this year, up by 100,000 bpd from its previous prediction.
Toward the end of the year, even if the producers’ goal of getting inventories toward their five-year average is achieved, “the market will hardly be in a position where it’s short of oil”, says Mr Bell, who notes that the OECD’s stocks will still be higher than when the oil price slump started three years ago in terms of days demand cover. “Russia and Saudi Arabia more or less acknowledged this yesterday when they announced their support for a nine-month extension of the deal,” he says.
There are a number of analysts now seeing the glut lasting well beyond the early part of next year. “In our current base case, we see 2018 as being strongly oversupplied, to the tune of close to 1.5 million bpd in the broader oil complex on average for the year,” says Eugene Lindell, the chief oil analyst at JBC Energy in Vienna. “The potential extension of the cuts programme to the end of March would not alter this picture drastically.”
amcauley@thenational.ae
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MATCH INFO
Euro 2020 qualifier
Ukraine 2 (Yaremchuk 06', Yarmolenko 27')
Portugal 1 (Ronaldo 72' pen)
Company%20Profile
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Diriyah%20project%20at%20a%20glance
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David Haye record
Total fights: 32
Wins: 28
Wins by KO: 26
Losses: 4
Israel Palestine on Swedish TV 1958-1989
Director: Goran Hugo Olsson
Rating: 5/5
FIRST TEST SCORES
England 458
South Africa 361 & 119 (36.4 overs)
England won by 211 runs and lead series 1-0
Player of the match: Moeen Ali (England)
The 10 Questions
- Is there a God?
- How did it all begin?
- What is inside a black hole?
- Can we predict the future?
- Is time travel possible?
- Will we survive on Earth?
- Is there other intelligent life in the universe?
- Should we colonise space?
- Will artificial intelligence outsmart us?
- How do we shape the future?
Company%20profile
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The Perfect Couple
Starring: Nicole Kidman, Liev Schreiber, Jack Reynor
Creator: Jenna Lamia
Rating: 3/5
About Proto21
Date started: May 2018
Founder: Pir Arkam
Based: Dubai
Sector: Additive manufacturing (aka, 3D printing)
Staff: 18
Funding: Invested, supported and partnered by Joseph Group
Dunbar
Edward St Aubyn
Hogarth
BEETLEJUICE BEETLEJUICE
Starring: Winona Ryder, Michael Keaton, Jenny Ortega
Director: Tim Burton
Rating: 3/5
Five famous companies founded by teens
There are numerous success stories of teen businesses that were created in college dorm rooms and other modest circumstances. Below are some of the most recognisable names in the industry:
- Facebook: Mark Zuckerberg and his friends started Facebook when he was a 19-year-old Harvard undergraduate.
- Dell: When Michael Dell was an undergraduate student at Texas University in 1984, he started upgrading computers for profit. He starting working full-time on his business when he was 19. Eventually, his company became the Dell Computer Corporation and then Dell Inc.
- Subway: Fred DeLuca opened the first Subway restaurant when he was 17. In 1965, Mr DeLuca needed extra money for college, so he decided to open his own business. Peter Buck, a family friend, lent him $1,000 and together, they opened Pete’s Super Submarines. A few years later, the company was rebranded and called Subway.
- Mashable: In 2005, Pete Cashmore created Mashable in Scotland when he was a teenager. The site was then a technology blog. Over the next few decades, Mr Cashmore has turned Mashable into a global media company.
- Oculus VR: Palmer Luckey founded Oculus VR in June 2012, when he was 19. In August that year, Oculus launched its Kickstarter campaign and raised more than $1 million in three days. Facebook bought Oculus for $2 billion two years later.
SUCCESSION%20SEASON%204%20EPISODE%201
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Company%20Profile
%3Cp%3E%3Cstrong%3ECompany%20name%3A%3C%2Fstrong%3E%20Hoopla%3Cbr%3E%3Cstrong%3EDate%20started%3A%20%3C%2Fstrong%3EMarch%202023%3Cbr%3E%3Cstrong%3EFounder%3A%3C%2Fstrong%3E%20Jacqueline%20Perrottet%3Cbr%3E%3Cstrong%3EBased%3A%3C%2Fstrong%3E%20Dubai%3Cbr%3E%3Cstrong%3ENumber%20of%20staff%3A%3C%2Fstrong%3E%2010%3Cbr%3E%3Cstrong%3EInvestment%20stage%3A%20%3C%2Fstrong%3EPre-seed%3Cbr%3E%3Cstrong%3EInvestment%20required%3A%3C%2Fstrong%3E%20%24500%2C000%3C%2Fp%3E%0A
Auron Mein Kahan Dum Tha
Starring: Ajay Devgn, Tabu, Shantanu Maheshwari, Jimmy Shergill, Saiee Manjrekar
Director: Neeraj Pandey
Rating: 2.5/5
EMIRATES'S%20REVISED%20A350%20DEPLOYMENT%20SCHEDULE
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About Housecall
Date started: July 2020
Founders: Omar and Humaid Alzaabi
Based: Abu Dhabi
Sector: HealthTech
# of staff: 10
Funding to date: Self-funded
Company%20Profile
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