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IEA hails market surplus return after OPEC output hike

IEA hails market surplus return after OPEC output hike

Mubasher: The International Energy Agency (IEA) welcomed the crude market’s return to surplus as an output hike by the Organization of Petroleum Exporting Countries (OPEC) expands global inventories and weighs on prices.

“Rising stocks should be welcomed as a form of insurance, rather than a threat,” the IEA said in its monthly report on Wednesday.

“The response to the call by the IEA and others to increase production is a reminder that the oil industry works best when it works together,” the agency added.

The Paris-headquartered agency warned last month that high energy prices could threaten global economic growth.

Crude future prices surged in early October on concerns that US sanctions against oil-rich Iran would tighten market supplies.

However, production hikes by Saudi Arabia, Russia and the US, coupled with US exemptions for some importers of Iranian shipments have provided the market a buffer to supply shocks.

“Global oil supplies are growing rapidly, as record output from Saudi Arabia, Russia and the US more than offsets declines from Iran and Venezuela,” the energy watchdog said.

In addition, the IEA expected oil demand growth to be “solid” partially due to lower prices, while projecting global consumption to rise by 1.3 million barrels per day (bpd) for this year and 1.4 million bpd for the next year.

 By 1:12 pm GMT, US Nymex crude futures rose 1.08% to $56.29 per barrel (pb), while global benchmark Brent futures climbed 1.31% to $66.33 pb.