Higher-than-forecast demand should bolster oil prices throughout 2016, despite high stocks continuing to exert downward pressure on prices, the IEA said today.
Global demand for oil will grow by 1.4 million barrels per day (bpd) this year to 96.1 million bpd, the International Energy Agency (IEA) said in its monthly oil market report, revising up last month's forecasts of a 1.3 million bpd rise.
While predicting a "return to balance" in overall "big picture" market direction, the IEA said "the existence of very high oil stocks is a threat to the recent stability of oil prices."
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Last month the agency had warned significant price rises were unlikely given that "there is an enormous inventory overhang to clear."
The IEA noted crude prices had edged off an early June peak above USD 52 per barrel to trade in a USD 45-50 range -- a stark contrast to the nearly daily price falls earlier this year.
"Our underlying message that the market is heading to balance remains on track, but the modest fall back in oil prices in recent days to closer to USD 45/bbl is a reminder that the road ahead is far from smooth," the IEA concluded.
"The adjustments to our data this month suggest that little has changed with the market showing an extraordinary transformation from a major surplus in 1Q16 to near-balance in 2Q16," the report added.
Oil prices, which slumped below the USD 30 mark in January, rebounded earlier this week from two-month lows as an OPEC forecast pointed to an easing of global oversupply.
US benchmark West Texas Intermediate for August delivery yesterday jumped USD 2.04 to USD 46.80 a barrel on the New York Mercantile Exchange, while in London, Brent North Sea crude for delivery in September added USD 2.22 to USD 48.47.
In its own July report, OPEC had forecast the global supply glut would ease this year and next, as producers outside the cartel, particularly the US cut production.
The 14-member cartel, which provides about one-third of the world's crude, has squeezed competitors in recent months by keeping the taps open, saying June production rose by 264,000 bpd to an average 32.9 million barrels bpd.
OPEC predicted global demand growth would pick up in 2017 to allow the market to remove excess stocks.
For 2017, the IEA forecast a 1.3-million-bpd increase to 97.4 million bpd, largely thanks to demand in non-OECD countries, led by India and China.
Demand in India was forecast to rise faster than anywhere in 2017, by 280,000 bpd, whereas "the main restraint on recent Chinese demand data continues to be the weakening of the domestic economy, with official estimates of economic growth easing.
