IEA notes “waning confidence” in oil market re-balancing

The IEA Thursday noted “waning confidence” by oil market participants in the re-balancing of supply and demand.

The International Energy Agency noted net long positions have fallen to their lowest levels since January 2016.

In its monthly report, the IEA also pointed to a “dramatic” recovery in oil output by Libya and Nigeria and a fall in OPEC compliance with output cuts.

In its monthly report Wednesday, OPEC said output in June rose by 393,000 barrels per day.

OPEC and non-OPEC producers have agreed to cut output by 1.8 million barrels per day through to March.

“Our current view is that compliance slipped to 78% in June from 95% in May,” the IEA said.

The Paris-based agency said low prices could cause U.S. shale producers to reconsider their levels of activity.

It noted remarks by leading company executives saying that oil prices need to be around $50 to maintain production growth.

The IEA said global demand growth rebounded to 1.5 million barrels per day in the second quarter.

It said demand and supply implies a draw of 700,000 barrels per day in the second quarter.