IEA says oil market is starting to turn a corner after record highs

 
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GROWTH in oil supply has outstripped rising demand for the first time since 2009, the International Energy Agency said yesterday, adding that it “detects a turning of the tide for market fundamentals”.

Global supply is expected to grow by 0.7m barrels per day during the year, despite unplanned stoppages in the North Sea and elsewhere curbing output in OECD nations in the first quarter by around 1.1m barrels per day.

Countries are bolstering their stockpiles of oil during the quieter spring months, the IEA noted.

Brent crude futures were trading at around $119.50 a barrel yesterday, down from the near-record highs of $128 seen earlier in the year.

However, the IEA does not expect prices to ease much during the year due to continued worries over Iran, which produced 3.3m barrels per day in March, down 50,000 barrels during the month.

It has threatened to cut off supplies in the face of increasingly tough sanctions from the US.

However, the US and Saudi Arabia have pledged to boost output to offset any hit to global supplies.

“We cannot discount the possibility that prices will remain high so long as geopolitical uncertainties remain,” the IEA added in its monthly oil report.

Analysts said that while the report initially suggests a well supplied market, there remain concerns about replacing Iranian crude.

Gareth Lewis-Davies, energy commodity strategist at BNP Paribas, said: “At an initial level the report appears to present a market that is well supplied ... but if you look closely, concerns around Iran and fact that stocks are still low remain key issues.”