Oil market supply tightening

The International Energy Agency said Thursday that oil markets have tightened this year, thanks to <a href=’https://staging.theenergyyear.com/companies-institutions/opec/’>OPEC-led production curbs and US sanctions on Iran and Venezuela, but noted that the demand outlook for 2019 was extremely uncertain.

“The huge increase in oil production we saw in the second half of 2018 has reversed following the implementation of the new Vienna Agreement and the increasing effectiveness of sanctions against Iran and Venezuela,” the IEA said in its monthly report, leading to a “dramatic increase in prices” so far this year.

The IEA highlighted that demand was a “very important” piece of the puzzle for oil market rebalancing, but uncertainty over the global economy was too intense to allow for a change to its forecasts.

“As far as 2019 is concerned, amongst the analyst community there is an extraordinarily wide divergence of view as to how strong growth will be,” the IEA said in its report.

“We maintain our forecast of 1.4 million barrels per day, but accept that there are mixed signals about the health of the global economy, and differing views about the likely level of oil prices.”

Oil prices continued to trade lower Thursday after the report was released, pulling back from five-month highs. Crude bulls ran out of steam overnight with profit-taking attributed to Wednesday’s surge in US oil inventories.

US crude oil futures fell 0.6% to $64.20 by 4:30 AM ET (8:30 GMT), while Brent oil traded down 0.3% to $71.52.