Key highlights from IEA’s monthly oil market report

According to developed markets energy watchdog, International Energy Agency (IEA), sharper drop in supply outside OPEC, steady demand and unexpected outages are bringing the oil market closer to balance.

• IEA previously projected demand growth of 1.2 million barrels/day in 2016. However it found demand growth higher in first three months of the year. Demand grew faster at 1.4 million barrels/day and 30% of that came from India, pointing that Asia’s star performer has taken over China in growth. However IEA kept its forecast unchanged at 1.2 million barrels/day for the whole year and if it is reached oil demand will reach 95.9 million barrels/day globally.

• IEA warns that any demand surprise likely to be on the upside rather than downside.

• Due to outages in Libya, Nigeria oil market is closer to balance. Strike in Kuwait also led to temporary supply disruption.

• Wildfire in Canada has led to supply cut of 1.2 million barrels/day.

• IEA revised its forecast for production cut/supply drop outside OPEC to 0.8 million barrels/day in 2016 from previous estimate of 0.71 million barrels.

• Venezuela is also suffering output drop largely due to severe power disruption in the country.

• According to IEA, the above factors have offset any bearish sentiment arising from failure of Doha talks.

• Oil supply rose 0.25 million barrels/day in April, which is just 50,000 barrels/day higher from a year back.

• Stock buildup was slowest since end-2014. IEA expects stocks buildup of 1.3 million barrels/day in first half of 2016 and just 0.2 million barrels/day in second.

• On the supply side, most stellar increase has been from Iran, where exports rose by 0.6 million barrels/day.