IEA sees oil market rebalance but warns of Libya, Nigeria surge

On Monday, Russian and Saudi energy ministers said in a joint statement that Moscow and Riyadh meant to propose a 9-month extension of the current Vienna agreement on oil output cuts on the existing conditions at the OPEC ministerial meeting in late May.

Global oil markets are rebalancing as supply cuts by OPEC and its allies take effect, yet longer curbs are needed to drain excess inventories, according to the International Energy Agency.

At the end of November, the Organization of Petroleum Exporting Countries (OPEC) agreed to cut output by 1.2 million barrels per day (mb/d) from January 1, initially for a period of six months.

Oil prices were little changed on Tuesday as the market awaited direction from weekly USA inventory data and as Kuwait joined top producers Saudi Arabia and Russian Federation in support of prolonging supply cuts through March 2018 to reduce a global crude glut."We expect a rangebound trade today with prices largely confining to yesterday's parameters as the market awaits another round of weekly stats", Jim Ritterbusch, president of Chicago-based energy advisory firm Ritterbusch & Associates, said in a note.USA crude oil inventories were expected to fall by around 2.3 million barrels during the week ended May 12, according to a Reuters poll.

Oil touched a five-month low of $43.76 a barrel in NY on May 5 amid slower demand growth and rising supply outside OPEC, particularly in the U.S.

"Extending the cuts for another nine months may not eliminate the glut in the market", said Sadad Al-Husseini, a former executive vice president of exploration and development at Saudi Arabian Oil Co., the state producer also known as Saudi Aramco. "These combined volumes could largely offset the benefit of the extended cuts", Goldman Sachs said, keeping its average Brent price forecast for the third quarter at $57 per barrel.

"We assume that the main thing is not the price, but the (intention) to bring average monthly reserves back to the average five-year level", the minister said.

The EIA (U.S. Energy Information Administration) estimates that Iraq's crude oil production fell by 5,000 bpd (barrels per day) to 4.4 MMbpd (million barrels per day) in April 2017-compared to March 2017. Thus, OPEC countries reduced the average daily production by nearly 1.2 million barrels.

In the first quarter, the IEA said, "we might not have seen a resounding return to deficits but this report confirms our recent message that the re-balancing is essentially here and, in the short term at least, is accelerating".

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