The oil market surplus may run into a third year in 2017 without an output cut from OPEC, while escalating production from exporters around the globe could lead to relentless supply growth, the International Energy Agency said on Thursday.
In its monthly oil market report, the group said global supply rose by 800,000 barrels per day in October to 97.8 million bpd, led by record OPEC output and rising production from non-OPEC members such as Russia, Brazil, Canada and Kazakhstan.
The Paris-based IEA kept its demand growth forecast for 2016 at 1.2 million bpd and expects consumption to increase at the same pace next year, having gradually slowed from a five-year peak of 1.8 million bpd in 2015.
The Organization of the Petroleum Exporting Countries meets at the end of November to discuss a proposed cut in production to a range of 32.5 to 33 million bpd, but discord among members over exemptions and production levels has raised doubt over OPEC’s ability to deliver a meaningful reduction.
“Whatever the outcome, the Vienna meeting will have a major impact on the eventual – and oft-postponed – rebalancing of the oil market,” the IEA said.
“If no agreement is reached and some individual members continue to expand their production then the market will remain in surplus throughout the year, with little prospect of oil prices rising significantly higher. Indeed, if the supply surplus persists in 2017 there must be some risk of prices falling back.”