IEA sees oil market flipping into deficit in second quarter

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IEA sees oil market flipping into deficit in second quarter GlobeBusiness

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.

Solid growth in non-OPEC oil output led by the United States should ensure demand is met, the IEA said.The Paris-based 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. 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.

However, in the event of a major loss of Venezuelan supply, the Organization of the Petroleum Exporting Countries had about 2.8 million bpd of effective spare capacity, the IEA said.In 2018, the United States contributed 79 percent of the 2.8 million bpd of non-OPEC output growth.“The relentless pace continues into 2019, when U.S. supply is expected to expand by 1.5 million bpd and account for 83 percent of non-OPEC growth of 1.8 million bpd,” it said.

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