In a report released today, the IEA said that global oil markets are recovering due to steady growth in demand, but that a return to stability has been hampered by non-compliance with quotas among OPEC members, particularly Algeria, Iraq, and the United Arab Emirates. Non-OPEC countries are also continuing to expand output.
Oil inventories have been drifting lower so far this year – by about 500,000 barrels, but inventories were high to begin with and remain well above long term averages. Strong demand is underpinning the drawdown with demand expected to be higher by 1.5 million barrels per day this year and another 1.4 million barrels per day next year.
Offsetting demand strength is a cadre of OPEC nations producing higher than quotas. OPEC compliance is now only about 75% and collectively the OPEC nations are producing 470,000 barrels per day of oil more than their allowed quotas. Non-OPEC nations, particularly the United States, are further influencing the supply side with non-traditional sources.
West Texas Intermediate Crude prices are currently $48.48 per barrel, down from about $53 per barrel at the start of the year.
The full IEA report can be seen here.