IEA expects global oil market to remain oversupplied

The International Energy Agency (IEA) has upwardly revised its estimate of global oil demand and now expects it to grow by 1.6 million barrels per day in 2015 and by 1.4 million barrels per day in 2016. At the same time, non-OPEC supply looks set to grow significantly more slowly this year than last year, and even to decline next year. 

Consequently, the estimated call on OPEC will rise to 30.8 million barrels per day in 2016 following a figure of 29.5 million barrels per day this year, notes Commerzbank. Nonetheless, the IEA predicts that the oversupply will continue well into the coming year, claiming that OPEC produced 31.8 million barrels per day in July. In other words, OPEC would still need to reduce its output by 1 million barrels per day for the market to be balanced next year despite the higher demand for OPEC oil. An even greater reduction would be necessary if demand were not to develop as dynamically as the IEA currently assumes, says Commerzbank.