Oil market balance to return to significant surplus soon
Baku, Azerbaijan, Sept.12
By Leman Zeynalova – Trend:
Oil market balance is expected to return to a significant surplus soon, Trend reports with reference to the Oil Market Report of the International Energy Agency (IEA).
“While the relentless stock builds we have seen since early 2018 have halted, this is temporary. Soon, the OPEC+ producers will once again see surging non-OPEC oil production with the implied market balance returning to a significant surplus and placing pressure on prices. The challenge of market management remains a daunting one well into 2020,” said the report.
IEA estimates that a post-hurricane rebound in the US raised global oil supply by 530 kb/d in August to 100.7 mb/d.
“US expansion, plus big gains from Norway and Brazil, is set to boost non-OPEC growth from 1.9 mb/d this year to 2.3 mb/d in 2020. The non-OPEC surge will cut the need for OPEC crude to 28.3 mb/d in 1H20, 1.4 mb/d below the group’s August output. Compliance with the OPEC+ agreement fell to 116 percent in August. In June, the US overtook Saudi Arabia to become the world’s top oil exporter,” reads the report.
The recent fall in global refining activity bottomed out in July, and throughput is set to return to y-o-y growth in 4Q19, according to IEA.
“Increased activity may depress refining margins from their current levels which are the highest for 2019. Preparations for the International Maritime Organisation’s new fuel emission standards are likely to offer support through stronger pricing for compliant fuels. We believe that, overall, the IMO regulations will be introduced with relatively little disruption,” said the report.
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