The global oil market is close to balance after years of oversupply, says the International Energy Agency

 
Courtney Goldsmith
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The price of oil has improved after a rocky March (Source: Getty)

The global oil market is "very close" to balance after about three years of a glut of supply.

The International Energy Agency (IEA) today said supply and demand could be coming back into balance as top exporters cut production to offset declining demand.

"It can be argued confidently that the market is already very close to balance," the agency said.

In the first quarter of the year, the IEA said oil stockpiles in industrialised countries lifted "marginally" as inventories in the Organisation for Economic Cooperation and Development (OECD) fell by 17.2m barrels in March, resulting in an increase of 38.5m barrels, or 425,000 barrels per day (bpd), in the first three months of the year.

Read more: Opec output cuts in "probation period" as the market tightens, IEA says

The Paris-based agency said global demand is forecast to grow 1.3m barrels bpd in 2017, a second consecutive annual decline and slightly below its prior forecasts following weaker demand in the first quarter of the year.

World oil supply fell by 755,000 bpd in March as the Organisation of the Petroleum Exporting Countries (Opec) and non-Opec producers maintained "impressive" compliance with the agreed output cuts.

However, the agency warned output from non-Opec producers is set to rise again, growing by 485,000 bpd in 2017, recovering from a decline of 790,000 bpd last year. The growth will come mainly from the US where monthly data shows that output reached 9m bpd in March.

"We now expect that US production will be 680,000 bpd higher at the end of the year than it was at the end of 2016, an upgrade to our previous forecast," the IEA said.

Read more: Peak oil is back – and the IEA reckons it's coming soon

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