Supply and demand gap
The IEA (International Energy Agency) estimates that the crude oil supply and demand gap could diminish in 2H16. The IEA thinks that the excess could fall to 200,000 bpd (barrels per day) in 2H16—compared to 1.5 MMbpd in 1H16. However, the IEA might revise the forecast in its July 2016 report following the results of the Brexit referendum.
EIA’s STEO report
In its June STEO (Short-Term Energy Outlook) report, the EIA (U.S. Energy Information Administration) estimated that the global crude oil supply and demand gap will average 0.97 MMbpd (million barrels per day) in 2016. The global crude oil supply and demand gap is expected to fall to 0.25 MMbpd in 2017.
The narrowing supply and demand gap would benefit crude oil prices. However, Brexit and the strong dollar will have a negative impact on oil prices. The expectation of slowing demand and economic uncertainty could also add pressure to crude oil prices. For more on economic uncertainty, read the first part of the series.
In the final part of this series, we’ll look at some crude oil price forecasts.