Volatility dominates in oil market
By Nigar Abbasova
Volatility in still high in the world energy market, as the recently revealed non-supportive data strengthens skepticism over reaching a balance and stability in the market of black gold.
While global energy market is still suffering from the oil glut, OPEC worsened its forecast on the global oil demand for 2017 in its November report.
The cartel forecasted the demand to stand at 95.55 million barrels per day, while the expectation for 2016 remained unchanged at the level of 94.4 million barrels.
However, the non-OPEC oil supply estimation for 2016 has been revised down by 0.1 million bpd. This revision was due to higher-than-expected declines in the third quarter of 2016 in the US, Mexico, Norway, the UK, Malaysia, Kazakhstan and China, which were partially offset by higher output from Canada, Russia and other European members of the Organization for Economic Co-operation and Development (OECD), according to OPEC.
The report said that non-OPEC production in the second half of 2016 is expected to be lower than in the first half of 2016, despite the continued rise in US rig counts, the end of seasonal maintenance, and the startup of new projects.
For 2017, non-OPEC supply growth has also been revised down by a marginal 10,000 bpd to show an increase of 0.23 million bpd, while it is expected to average 56.43 mbd in 2017.
Investors meanwhile are still in anticipation of OPEC meeting, while the proposed production ceiling ranges between 32.5 million barrels per day (mb/d) and and 33 mb/d.
Market-watchers are concerned and doubtful as the details of how much the cartel will cut oil output, and which countries will bear the brunt of the cuts are absent.
Some analysts say even if the oil cut agreement is signed, enforcement of individual production quotas could be weak, while freezing output at current high levels may not be sufficient for ousting the glut.
The IEA’s monthly report showed OPEC members pumped a record 33.83 mbd in October, further adding fire to the problematical character of the deal.
The agency said an oversupply could run into 2017 should no agreement be reached in the upcoming meeting.
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Nigar Abbasova is AzerNews’ staff journalist, follow her on Twitter: @nigyar_abbasova
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