The International Energy Agency, IEA, has said that the Organization of Petroleum Exporting Countries, OPEC-led production cuts will last for the rest of the year, and an early termination in June would be a surprise to the market.
The oil market will move from surplus into a small deficit after the first quarter but it will be fairly balanced overall this year, the IEA’s markets division head Neil Atkinson said in Kuwait City, adding that oil demand growth will still be “solid” in 2018 even as higher prices slow the pace from last year.
“It would be surprising to see OPEC ending the cuts deal in June,” he said.
Speculation has grown that the Organization of Petroleum Exporting Countries and others participating including Russia will end the cuts early with oil prices near a three-year high and stockpiles falling. BNP Paribas SA, UBS Group AG and Citigroup Inc. predict the deal will be phased out in the second half.
OPEC and Russia this month reaffirmed that they’ll persevere with the cuts until the end of the year, and signaled readiness to cooperate beyond that. Producers should keep limits through 2018 as the market may re-balance at the end of the year or in 2019, Saudi Arabia Energy Minister Khalid Al-Falih said at the time.
The U.S. will add about 1 million barrels a day of new supply this year, an estimate “not far” from the outlook by OPEC, which tends to underestimate non-OPEC supply growth outside the U.S., Atkinson said. Total non-OPEC supply will increase by 1.7 million barrels a day this year, he said.