Global oil demand growth to slow in 2016: IEA

The bottom of the world’s oil market “may still be ahead”, a closely-watched report said Friday.

There swill be no overall production growth outside the Organization of Petroleum Exporting Countries (OPEC) for the first time since 2008, according to the IEA. – Reuters picLOS ANGELES: Oil prices are set to come under further pressure from easing global demand and an expanding glut of crude while a rebalancing of the markets may last well into next year, the West’s Energy watchdog said today.

But the fall in prices to US$50-US$60 (RM189-RM227) per barrel in recent months from as high as US$115 a year ago has yet to depress North American supply.

Non-Opec supply as a whole, after expanding by a massive 2.4m bpd in 2014, looks on track to slow to growth of 1m bpd in 2015 and stay flat in 2016, the IEA said. “Non-Opec supply growth is expected to grind to a halt in 2016, as lower oil prices and spending cuts take a toll”. The grade has lost 13% from this year’s peak in May.

Russian Federation and Brazil are adding to the world oil-market surplus with an “odds-defying, record-breaking surge in output, the report said”. The 2016 numbers are supportive of prices because of the “huge swing” in the trend of non-OPEC production growth, she said. While “cost savings, efficiency gains and producer hedging” have helped shale drillers beat expectations so far, the nation’s boom can’t keep going at current prices, the agency said. Russia’s production will slip next year to 10.86 MMbpd from 10.98 MMbpd, the agency forecast.

The agency sees demand slowing to 1.2 million barrels a day next year, from an average 1.4 million barrels a day in 2015.

But the IEA, which advises the world’s biggest economies on energy policy, says this mini golden era will soon end.

OPEC crude supply rose by 340,000 bpd in June to 31.7 million bpd, a three- year high, led by record high output from Iraq, Saudi Arabia and the United Arab Emirates, according to the IEA’s estimates.

U.S. oil production has also soared in recent years, as fracking – or the process of extracting oil from shale rock by injecting fluids into the ground – has revolutionised oil production in the country.

Cold weather and a recovery in economic growth drove higher-than-expected demand in developed western nations during the first quarter of 2015, but those market movers will likely disappear next year.