IEA: oil markets to see another glut in 2020

Cornelia Mascio
Luglio 13, 2019

The recent decision by oil producing countries to prolong cuts in output will not fundamentally change the outlook for a market that is heavily oversupplied, the IEA said yesterday.

The IEA report added that despite geopolitical tensions in the Middle East, particularly between the United States and Iran, the impact on oil prices so far has remained minimal.

Crude oil supply in the world exceeded demand by 900,000 bpd in the first half of the year, the International Energy Agency said in its latest monthly Oil Market Report, adding that forecasts had pointed to a deficit of half a million barrels daily. But supply is now well in excess of demand, said the Paris-based institution that provides advice to oil-consuming nations. Despite rising tensions between the USA and Iran, supply disruptions in major producers like Venezuela, Libya, Russia and Mexico, and surging demand amid the height of the US summer driving season, Brent crude oil - the benchmark for global prices and a bellwether for USA gasoline - was hovering around $66 per barrel as of Friday morning, about $10 lower than the same point past year.

'Clearly, this presents a major challenge to those who have taken on the task of market management, ' it added, referring to the Organisation of the Petroleum Exporting Countries and producer allies such as Russian Federation.

The interest for OPEC unrefined petroleum in mid-2020 could tumble to just 28 million bpd, it included, with non-OPEC extension in 2020 ascending by 2.1 million bpd - an entire 2 million bpd of which is required to originate from the United States. "The picture will evolve as 2019 progresses, but in the near term, the main area of focus remains demand growth".

Demand for Opec crude for 2019 was revised up by 0.1 mb/d from the previous report to stand at 30.6 mb/d, 1.0 mb/d lower than the 2018 level, reported Emirates news agency Wam. "European demand is sluggish; growth in India vanished in April and May due to a slowdown in [liquefied petroleum gas] deliveries and weakness in the aviation sector; and in the US demand for both gasoline and diesel in the first half of 2019 is lower year-on-year".

"On the positive side, the mood surrounding the US/China trade dispute appears to have improved and the resolution of outstanding issues would be a massive boost to economic confidence", the report said.

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