The Organization of the Petroleum Exporting Countries (Opec) forecast on Monday 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. In a monthly report, Opec said its current production is lower than the average forecast demand for its crude in the second half of 2016. The last full quarter when Opec pumped less than demand for its crude was in 2013, according to past Opec reports.
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, resulting in "a more balanced oil market toward the end of the year." Prices collapsed from $100 two years ago in a drop that deepened after Opec refused to cut output, hoping lower prices would curb rival supply. With signs the strategy is working, Opec at a June 2 meeting made no change to its output policy.
Attacks on Nigeria's oil industry, wildfires in Canada and losses elsewhere pushed the level of unplanned supply outages to the highest in at least five years in May.
