The one page summary is here: https://www.iea.org/newsroom/news/2017/january/omr-a-six-month-probation.html
Here are some highlights:
“The output cuts announced by OPEC and eleven non-OPEC producers have entered their probation period and it is far too soon to see what level of compliance has been achieved. The coming weeks will provide more clarity and in the meantime developments elsewhere in the oil supply/demand balance are very intriguing. Once again we have revised upwards our estimate for global oil demand growth in 2016: we now see growth at 1.5 mb/d, with most of the revision contributed by stronger European demand, mainly in LPG and diesel. Europe has seen two years of year-on-year growth following nine straight years of flat or declining demand.”
“For the non-OPEC countries as a whole, net production growth will be 380 kb/d – after taking into account the output reduction commitments by eleven countries – and this increase could be supplemented by higher production from Libya and Nigeria, both of which are exempt from the production cuts.”
“We were reminded on Jan. 16th by Saudi Arabia’s oil minister that the output deal might not be extended beyond its six month expiry date. By saying that an extension was “unlikely” he has issued a powerful reminder that if stocks are drawn in the first half of 2017 by the approximately 0.7 mb/d implied by OPEC producing close to its target with support from other producers, the market will have tightened and prices stabilised but not at a sufficiently high level to allow another bonanza for high cost producers. In the meantime, the market awaits the outcome of the output deal.”
Leave a Reply