Record oil glut stands at 3b barrels

The IEA’s latest market report renewed concerns over the global supply overhang that has driven a 60% collapse in oil prices since previous year.

A record glut of oil is set to continue into next year and maintain pressure on prices, the worldwide Energy Agency said on Friday.

Crude Oil stockpiles have grown to a record 3-B bbl because of strong production in OPEC and and non-OPEC producers, this is deepening the price damage. “Oil market bears may choose not to hibernate”, the IEA said, especially if forecasts for a mild winter in Europe and the United States turn out to be true. Crude Oil inventories are growing because supply growth still outpaces demand, the 12-member exporters group said in its monthly report Thursday. That is the first decline since March, according to OPEC figures. There are signs the a few fuel-storage depots in the eastern hemisphere have been filled to capacity, it said.

USA light tight oil, the driver of non-OPEC growth, is expected to decline by 600,000 bpd next year, versus previous expectations of contraction by 400,000 bpd. That contrasts with an expansion of 2.4-M BPD in Y 2014 in total non-OPEC output. While inventories peaked in early 2009 before OPEC implemented record production cuts, this time the group has signaled it won’t pare supplies to balance global markets and USA output is buckling only gradually in response to the price rout.

In its monthly report, OPEC said its output dropped in October but at current levels it could still produce a daily surplus above 500,000 barrels by 2016.

Surplus oil inventories are at the highest level in at least a decade because of increased global production, according to the Organization of Petroleum Exporting Countries.

The IEA predicted world oil demand would grow by a slow 1.2 million barrels per day in 2016, and said that, on the supply side, there had been no change in output in October from the powerful OPEC cartel.

“The impact of oil’s steep price plunge on end users is unlikely to be repeated and economic conditions are forecast to remain problematic in countries such as China”, the IEA said.