Opec upbeat despite oil dip

Opec yesterday predicted that the global oil market will be more balanced in the second half of this year as demand rises and rival supplies falter, echoing views expressed by ministers at the group’s meeting earlier this month.

The Organisation of Petroleum Exporting Countries (Opec) kept estimates for world supply and demand in 2016 unchanged in its monthly market report.

Disruptions in Nigeria reduced the group’s output to 32.36m barrels a day last month, a little below the 32.6m average required to satisfy estimated demand in the second half of the year.

“The expected improvement in global economic conditions should result in a more balanced oil market toward the end of the year,” the organisation’s Vienna-based research department said in a report. “The excess supply in the market is likely to ease over the coming quarters.”

Oil has surged about 80% from a 12-year low in February as the global glut is trimmed by unexpected disruptions and a slide in US output.

Opec did not set any output targets when its 13 members met on June 2 as the organisation sticks with Saudi Arabia’s strategy of pumping without limits to squeeze rival producers.

Output from the 13 nations slipped by 99,800 barrels a day last month as militant attacks curbed supplies from Nigeria. Membership will swell to 14 countries in July with the readmission of Gabon, which pumps about 200,000 barrels a day.

However, oil prices fell yesterday, weighed down by gloomy economic prospects in Europe and Asia and a related strengthening in the US dollar, which makes fuel imports for countries using other currencies more expensive.

The softening comes a week after crude prices hit 2016 highs on the back of a quicker-than-expected rebalancing in physical oil markets.

Brent crude fell to $49.74 per barrel, down 80c, after trading as low as $49.61. US crude was down 72c at $48.35 a barrel.

Commerzbank analyst Carsten Fritsch said worries that Britain will vote later this month to leave the EU, which sent stocks spiralling lower yesterday, could also erase more of oil’s recent gains.

“The most recent oil price increase was driven by bullish market sentiment,” Mr Fritsch told the Reuters Global Oil Forum. “A Brexit could turn market sentiment around.”

The ECB also said the fall in oil prices over the past two years would add less to global growth than earlier thought and the overall impact could even be negative.

* Bloomberg and Reuters