Despite massive amounts of oil coming to market from everyone but the Middle East, oil prices are going nowhere and will probably remain elevated, the IEA says.
In its latest report, titled, “The New Maths On Supply,” the Paris-based agency increased its global demand forecast by 90,000 barrels a day, led by growth in the U.S., Egypt, Taiwan and France.
Non‐OPEC monthly supply growth is forecast to jump to a near-record 1.7 million barrels a day from 1.1 mb/d in 2013, the IEA says.
It could even reach 1.9 million mbd, a figure not seen since the ’70s.
And the agency confirms that the U.S. is set to become the leading non-OPEC liquids producer, surpassing Russia.
But they write that, “surging non‐OPEC production does not necessarily equate to a supply glut.”
That’s because OPEC itself has seen severe supply outages, mostly in Libya and Iraq, amounting to 1 million barrels a day.
And the disruptions are expected to linger, they write:
“Although Tripoli has since announced a partial restart of production, tribal unrest and political instability continue to throw formidable hurdles for the return of Libyan oil to market. With OPEC losses partly cancelling out North American gains, crude prices have remained well supported by geopolitical turmoil in the MENA region.”
They also see the recovery in Europe supporting prices.
The IEA does not forecast oil futures, but suggests U.S.-traded West Texas Intermediate contracts are likely to de-couple again from London-traded Brent as OPEC supply continues to wobble.