Unplanned outages continue to shore up the market quicker than expected – OPEC

The OPEC Monthly Oil Market Report released Monday shows the group expects oil markets to balance out in the second half of this year. Unplanned supply outages in Nigeria and Canada will help to tighten up markets more quickly, the group said.

In its report, OPEC maintained its expectations for world supply and demand in 2016 from last month. The group expects demand to grow 1.2 MMBOPD this year driven largely by India, while supply falls another 140 MBOPD from the first half of the year. OPEC predicts that supply in the second half of this year will be down 1 MMBOPD from the same time in 2015.

The group’s own production was down 99.8 MBOPD in April compared to May, according to secondary sources cited in the report. The declines were largely from Nigeria, which reported production of 1.4 MMBOPD, down 0.25 MMBOPD from April. Political unrest continues to be a major problem in Nigeria, once Africa’s largest producer of crude oil. Rebel groups are attacking oil and gas infrastructure in an attempt to cripple the government, which relies heavily on oil and gas revenues.

Non-OPEC production is expected to fall 740 MOBPD to 56.4 MMBOPD this year, with downward revisions in Canada, Brazil and Colombia broadly offsetting upward revisions in the U.S., U.K., Russia and Azerbaijan.

OPEC expects demand for its own oil to reach 31.5 MMBOPD this year. The group produced 32.4 MMBOPD in May.

“Shutdowns in Nigeria and Canada tightened the oil market markedly and brought supply and demand more closely into alignment earlier than many had expected, bolstering prices,” OPEC said in its report.

But the cartel cautioned that “… there is still a massive global supply overhang.”

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