Global oil supply rose by 600,000 barrels per day in September, driven by record OPEC production and a post-Soviet high in Russia, according to a report released Tuesday.
The International Energy Agency predicted that oil demand, however, would grow by 1.2 million barrels per day this year and next, more than balancing supply.
And commercial inventories in non-OPEC countries fell in August for the first time since March, by 10 million barrels to 3 billion barrels, due in part to crude stocks falling in both Japan and the U.S.
Analysts quickly called the report bullish.
“Global supply/demand dynamics are tightening,” noted energy investment banking firm Tudor Pickering Holt. Demand outlooks remained above the firm’s early estimates, it said.
World oil output grew by 200,000 barrels per day on the year, or about two-tenths of a percent, to 97.2 million barrels per day, the IEA report said. Production in the Organization of the Petroleum Exporting Countries rose by 160,000 barrels per day in September to a record of 33.6 million barrels, fueled by record pumping in Iraq and reopened ports in Libya. Saudi Arabia, Kuwait and the United Arab Emirates held supply at or near historic highs; Iran sustained volumes at 3.7 million barrels per day, at pre-sanctions levels.
Output from the group’s 14 members stood 900,000 barrels per day higher this year than last.
Total non-OPEC production was down by the same amount on the year — despite a Russia-led surge in September — due to sharp declines in the U.S. and China.
The IEA report forecast demand to expand by 1.2 million barrels per day this year, with a similar gain in 2017. But demand growth continues to slow, it said, dropping from a five-year high in the third quarter of 2015 to a four-year low this quarter, thanks to vanishing growth in Europe, North America and other non-OPEC countries, and a marked deceleration in China.
The question mark, analysts said, was OPEC’s commitment to a production cut, as outlined in Algiers last month, and Russia’s interest in joining.
Earlier this week, the Saudi energy minister said he was optimistic of a deal, his Algerian counterpart said he expected to see non-OPEC commitments, and Russian President Vladimir Putin said his country was ready to join.
And yet the chief executive of the state-owned Russian oil giant Rosneft said on Monday that he doubted some OPEC countries would cut production and balked at joining the deal.
U.S. oil prices had fallen 62 cents at midday, to $50.70.