The oil market will flip into a modest deficit from the second quarter of this year, with OPEC possessing a hefty supply cushion to prevent any price rally in case of possible supply disruptions, the International Energy Agency said on Friday.
The IEA, which coordinates the energy policies of industrialized nations, kept its 2019 oil demand growth forecast unchanged at 1.4 percent, or 1.4 million barrels per day.
Solid non-OPEC oil output growth led by the United States should ensure demand is met, the IEA said.
The IEA said the market could show a modest surplus in the first quarter of 2019 before flipping into a deficit in the second quarter by about 0.5 million bpd.
“At the same time, (OPEC) production cuts have increased the spare capacity cushion. This is especially important now as economic sentiment is becoming more pessimistic and the global economy could be entering a vulnerable period,” the IEA added.
The agency said it was particularly concerned about a possible further decline in production in Venezuela, where output has stabilized at 1.2 million bpd in recent months.
It said the degradation of Venezuelan power system, vital for oil output, was such that it could not be sure if the fixes were durable.
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