The oil market is now in balance thanks to unplanned outages and robust demand, particularly from emerging economies, but this equilibrium will tilt into surplus again early next year, the International Energy Agency (IEA) said today. 
 
The agency said in its monthly report that demand growth in 2017 is likely to reach 1.3 million barrels per day (bpd), the same level at which it estimates growth for this year, having revised up its May 2016 forecast of 1.2 million bpd. 
 
&quot;Again, on the planning assumption that OPEC oil production grows modestly in 2017, we expect to see global oil stocks build slightly in the first half of 2017 before falling slightly more in the second half of 2017. For the year as a whole, there will be a very small stock draw of 0.1 million bpd,&quot; &nbsp; said&nbsp;the IEA. 
 
&quot;At halfway in 2016, the oil market looks to be balancing; but we must not forget that there are large volumes of shut-in production, mainly in Nigeria and Libya, that could return to the market, and the strong start for oil demand growth seen this year might not be maintained,&quot; said&nbsp;the Paris-based agency . 
 
Most of the anticipated demand growth this year and in 2017 is expected to come from nations that are not part of the Organisation for Economic Cooperation and Development (OECD), the agency said. 
 
&quot;We must stress that this is our first look at 2017 and the huge number of moving parts will see us amend our numbers accordingly. However ... the direction of travel seems to be clear,&quot; said&nbsp;the IEA. 
 
The IEA&#39;s latest demand estimate for the first three months of this year shows global oil deliveries rising by 1.6 million bpd to 95.2 million bpd, with nine out of every 10 extra barrels going to a non-OECD economy. 
 
On the supply side, the IEA said output fell by 590,000 bpd year-on-year to 95.4 million bpd in May, the first major decline since the start of 2013, as spending cuts and outages reduced non-OPEC production by 1.3 million bpd from a year earlier. 
 
Having fallen by 900,000 bpd in 2016, non-OPEC supply growth is expected to rise by 200,000 bpd in 2017, lifting output to 57 million bpd, the IEA said. 
 
Crude output from the Organization of the Petroleum Exporting Countries fell by 100,000 bpd in May to 32.61 million bpd, after a spate of attacks on oil infrastructure in Nigeria offset higher output from the Middle East. Production was still 500,000 bpd higher than in May last year. 
 
&quot;Iran has clearly emerged as OPEC&#39;s fastest source of supply growth this year, with an anticipated annual gain of nearly 700,000 bpd,&quot; the IEA said. 
 
The only other substantial increase from OPEC in 2017 could be from Nigeria, should security issues in the Niger Delta be resolved. 
(Reuters)

Large volumes of shut-in production from Nigeria and Libya can return to the market and that may change oil demand growth

The oil market is now in balance thanks to unplanned outages and robust demand, particularly from emerging economies, but this equilibrium will tilt into surplus again early next year, the International Energy Agency (IEA) said today. The agency said in its monthly report that demand growth in 2017 is likely to reach 1.3 million barrels per day (bpd), the same level at which it estimates growth for this year, having revised up its May 2016 forecast of 1.2 million bpd. "Again, on the planning assumption that OPEC oil production grows modestly in 2017, we expect to see global oil stocks build slightly in the first half of 2017 before falling slightly more in the second half of 2017. For the year as a whole, there will be a very small stock draw of 0.1 million bpd," said the IEA. "At halfway in 2016, the oil market looks to be balancing; but we must not forget that there are large volumes of shut-in production, mainly in Nigeria and Libya, that could return to the market, and the strong start for oil demand growth seen this year might not be maintained," said the Paris-based agency . Most of the anticipated demand growth this year and in 2017 is expected to come from nations that are not part of the Organisation for Economic Cooperation and Development (OECD), the agency said. "We must stress that this is our first look at 2017 and the huge number of moving parts will see us amend our numbers accordingly. However ... the direction of travel seems to be clear," said the IEA. The IEA's latest demand estimate for the first three months of this year shows global oil deliveries rising by 1.6 million bpd to 95.2 million bpd, with nine out of every 10 extra barrels going to a non-OECD economy. On the supply side, the IEA said output fell by 590,000 bpd year-on-year to 95.4 million bpd in May, the first major decline since the start of 2013, as spending cuts and outages reduced non-OPEC production by 1.3 million bpd from a year earlier. Having fallen by 900,000 bpd in 2016, non-OPEC supply growth is expected to rise by 200,000 bpd in 2017, lifting output to 57 million bpd, the IEA said. Crude output from the Organization of the Petroleum Exporting Countries fell by 100,000 bpd in May to 32.61 million bpd, after a spate of attacks on oil infrastructure in Nigeria offset higher output from the Middle East. Production was still 500,000 bpd higher than in May last year. "Iran has clearly emerged as OPEC's fastest source of supply growth this year, with an anticipated annual gain of nearly 700,000 bpd," the IEA said. The only other substantial increase from OPEC in 2017 could be from Nigeria, should security issues in the Niger Delta be resolved. (Reuters)

IEA sees oil market balance in 2016, surplus to re-emerge next year

The world is at risk of getting caught in a low-growth trap, dimming the hopes of future generations, unless governments step up spending quickly, the Organisation for Economic Cooperation and Development (OECD) said Wednesday. 
 
Moderate recovery since the global economic crisis in 2008 &quot;has precipitated a self-fulfilling low-growth trap&quot;, said Catherine Mann, the chief economist at the Organisation for Economic Cooperation and Development.&nbsp; 
 
&quot;Without comprehensive, coherent and collective action, disappointing and sluggish growth will persist, making it increasingly difficult to make good on promises to current and future generations,&quot; she added in an introduction to the OECD`s twice-yearly economic outlook. 
 
The OECD chopped its forecast for global growth this year to 3.0 percent, down from the 3.6 percent it forecast in October. For 2017 it now sees 3.3 percent growth. 
 
The dismal economic recovery has created forces that are now working to perpetuate slow growth, the OECD believes. 
 
In particular, businesses have little incentive to invest given moderate demand, while muted wage gains, unemployment and income inequality have held back consumption. Meanwhile, uncertainty also puts the brakes on spending. After years during which international economic instutions urged governments to practice austerity, Mann said that now &quot;fiscal policy must be deployed more extensively&quot;. 
 
&quot;almost all countries have room to reallocate spending and taxation towards items that offer more support to growth&quot; like investments in infrastucture as well as education, The OECD said. 
 
While central banks have been supporting the global recovery with ultra-low interest rates and stimulus measures, the OECD said &quot;it is clear that reliance on monetary policy alone has failed to deliver satisfactory growth and inflation.&quot; 
 
Moreover today`s low interest rates also provide an opportunity for governments to step up investment. 
 
Mann said the need for governments to shift up spending is urgent. 
 
&quot;The longer the global economy remains in the low-growth trap, the more difficult it will be to break the negative feedback loops, revive market forces, and boost economies to the high-growth path,&quot; she said. 
 
She warned that as things stand negative shocks &quot;could tip the world back into another deep downturn&quot; while geopolitical risks to the global economy are on the rise.The OECD sees the potential exit of Britain from the European Union following a referendum vote later this month as one major risk.&nbsp; 
 
If voters chose to leave, hits to trade, investment and spending would likely see the British economy grow by 3 percentage points less in the next four years than if voters choose to stay, according to the OECD. 
 
Already, uncertainty surrounding a possible Brexit &quot;has led to a significant slowdown in economic activity&quot;, although if voters choose to stay the OECD says it expects growth to pick up in the second half of this year.&nbsp; 
 
If Britain votes to remain in the EU in the referendum, which according to polls is a close call, growth will come in at 1.75 percent this year, the OECD expects. 
 
World markets went into a panic at the beginning of this year over the prospect of a sharp slowdown in China, which has been the source of most of global growth in recent years, but the OECD now sees growth moderating gradually thanks to recent government fiscal policy measures to support the economy. 
 
It forecasts China`s growth rate will slip to 6.5 percent this year, and then 6.2 percent in 2017. 
 
China`s economy grew by 6.9 percent last year. 
 
The strong dollar is expected to slow growth in the United States to 1.8 percent this year, from 2.4 percent last year. 
Meanwhile, the eurozone is seen as marking time at 1.6 percent growth. 
 
Japan should get a marginal boost, with growth of 0.7 percent this year, but then stumble to a mere 0.4 percent expansion in 2017.

Organisation for Economic Cooperation and Development pushes governments to spend more.

The world is at risk of getting caught in a low-growth trap, dimming the hopes of future generations, unless governments step up spending quickly, the Organisation for Economic Cooperation and Development (OECD) said Wednesday. Moderate recovery since the global economic crisis in 2008 "has precipitated a self-fulfilling low-growth trap", said Catherine Mann, the chief economist at the Organisation for Economic Cooperation and Development. "Without comprehensive, coherent and collective action, disappointing and sluggish growth will persist, making it increasingly difficult to make good on promises to current and future generations," she added in an introduction to the OECD`s twice-yearly economic outlook. The OECD chopped its forecast for global growth this year to 3.0 percent, down from the 3.6 percent it forecast in October. For 2017 it now sees 3.3 percent growth. The dismal economic recovery has created forces that are now working to perpetuate slow growth, the OECD believes. In particular, businesses have little incentive to invest given moderate demand, while muted wage gains, unemployment and income inequality have held back consumption. Meanwhile, uncertainty also puts the brakes on spending. After years during which international economic instutions urged governments to practice austerity, Mann said that now "fiscal policy must be deployed more extensively". "almost all countries have room to reallocate spending and taxation towards items that offer more support to growth" like investments in infrastucture as well as education, The OECD said. While central banks have been supporting the global recovery with ultra-low interest rates and stimulus measures, the OECD said "it is clear that reliance on monetary policy alone has failed to deliver satisfactory growth and inflation." Moreover today`s low interest rates also provide an opportunity for governments to step up investment. Mann said the need for governments to shift up spending is urgent. "The longer the global economy remains in the low-growth trap, the more difficult it will be to break the negative feedback loops, revive market forces, and boost economies to the high-growth path," she said. She warned that as things stand negative shocks "could tip the world back into another deep downturn" while geopolitical risks to the global economy are on the rise.The OECD sees the potential exit of Britain from the European Union following a referendum vote later this month as one major risk. If voters chose to leave, hits to trade, investment and spending would likely see the British economy grow by 3 percentage points less in the next four years than if voters choose to stay, according to the OECD. Already, uncertainty surrounding a possible Brexit "has led to a significant slowdown in economic activity", although if voters choose to stay the OECD says it expects growth to pick up in the second half of this year. If Britain votes to remain in the EU in the referendum, which according to polls is a close call, growth will come in at 1.75 percent this year, the OECD expects. World markets went into a panic at the beginning of this year over the prospect of a sharp slowdown in China, which has been the source of most of global growth in recent years, but the OECD now sees growth moderating gradually thanks to recent government fiscal policy measures to support the economy. It forecasts China`s growth rate will slip to 6.5 percent this year, and then 6.2 percent in 2017. China`s economy grew by 6.9 percent last year. The strong dollar is expected to slow growth in the United States to 1.8 percent this year, from 2.4 percent last year. Meanwhile, the eurozone is seen as marking time at 1.6 percent growth. Japan should get a marginal boost, with growth of 0.7 percent this year, but then stumble to a mere 0.4 percent expansion in 2017.

Spend for growth, OECD urges governments

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