OPEC turmoil could turn IEA’s balanced market into shortfall

Bloomberg

The world’s most prominent oil forecaster, the International Energy Agency, anticipates near-equilibrium between supply and demand in global crude markets next year. If OPEC members can’t resolve some massive output disruptions, that will turn into a significant shortfall.
World oil production in 2017 will very nearly match consumption, ending several years of oversupply, the Paris-based IEA forecast on June 14. For that to happen, the Organization of Petroleum Exporting Countries would have to pump an extra 650,000 barrels a day over the year, according to Bloomberg calculations based on IEA data. That would require solutions to militant attacks in Nigeria, deep political divisions in Libya or an economic crisis in Venezuela.
“The IEA is highly optimistic in its assumption of elevated OPEC supplies next year,” said Amrita Sen, chief oil analyst at consultants Energy Aspects Ltd. in London. “Even though many view outages in Libya and Nigeria as unplanned, we would argue they are partly symptomatic of low oil prices and unlikely to be resolved any time soon.”
The supply and demand forecasts from the IEA, which advises 29 nations on energy policy, are important because they shape trading. The price of Brent crude has been on a roller coaster since 2014, with a global surplus driving it down 75 percent to a 12-year low of $27.10 a barrel in January, only to rebound to about $48 amid supply disruptions & unprecedented investment cuts.
Million Barrels
By the end of next year, OPEC will need to pump nearly 1 million barrels above last month’s production level to keep the market in balance, according to Bloomberg calculations based on IEA data. The agency doesn’t publish the OPEC production level it assumes to calculate its balances and its press office declined to provide the figures or comment on the basis for its assumptions.
Fulfilling the IEA’s forecast would require OPEC to overcome some major hurdles. In Nigeria, oil production has slumped to a 28-year low of 1.37 million barrels a day — about 480,000 below its full capacity, IEA data show. A militant group calling itself the Niger Delta Avengers has been targeting pipelines and other infrastructure in the African nation for several months.