OPEC forecast that the world oil market will be more balanced in the second half of 2016 as outages in Nigeria and Canada help to speed up the erosion of a supply glut.
The Organization of the Petroleum Exporting Countries said its oil output fell 100,000 barrels per day (bpd) to 32.36 million bpd in May, according to its monthly report. That is 160,000 bpd less than OPEC’s forecast of the average demand for its crude in the second half.
Oil has risen to $50 a barrel from a 12-year low of $27 in January as the outages curb excess supply. These, say OPEC, are accelerating a tightening in the market it expected to happen anyway, as lower prices finally take their toll on higher-cost supply outside the group.
“The excess supply in the market is likely to ease over the coming quarters,” OPEC said in the report, published on Monday.
“Shutdowns in Nigeria and Canada tightened the oil market markedly and brought supply and demand more closely into alignment earlier than many had expected, bolstering prices.”
But OPEC cautioned: “Nevertheless, there is still a massive global supply overhang.”