IEA Sees 'Mission Accomplished' For OPEC, Russia As Oil Supply Drops

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It is not for us to declare on behalf of the Vienna agreement countries that it is "mission accomplished", but if our outlook is accurate, it certainly looks very much like it.

The country produced about 3.810 million barrels per day of crude oil in February, the report read.

Oil futures climbed to a three-year high in NY this week, moving toward $70 a barrel, as political tensions in the Middle East threaten to strain supplies even further.

Also, shrinking global oil inventories and expectations of a supply cut extension by the Organisation of the Petroleum Exporting Countries (OPEC) played a role. As a result, data released in the "next month or two" could show stockpiles have dropped below the five-year average, said the report.

OPEC OUTPUT SLIPPINGOn supply, the IEA said world oil production slipped by 120,000 b/d to 97.8 million b/d during March, after the OPEC-led oil producers cut output by 2.4 million b/d, significantly more than their pledged 1.7 million b/d. The IEA the estimate accounts for a healthy global economy and the 55% increase in crude prices since June.

New York-traded fell 62 cents, or about 0.9%, to $66.20 a barrel by 10:58AM ET (14:58GMT).

The IEA said Opec's compliance rate with these supply cuts was at 163 per cent in March due to extra cutbacks in places like Venezuela, Libya and Angola, while its non-Opec partners achieved a 90 per cent compliance rate.

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He said that "Saudi Arabia continues to lead by example, producing less than its ceiling despite seasonally rising domestic and global demand, and looks forward to all OPEC and participating non-OPEC countries maintaining or exceeding full conformity with their commitments".

The global oil stocks surplus is close to evaporating, OPEC says.

"The Syrian escalation risk can not be fully written off, but we view that it deserves less of a premium than three days ago", Petromatrix said in a note.

Indeed, the IEA noted that, expressed on a days of forward demand basis, OECD oil stocks have already been below the five-year average since January this year.

Despite this, supplies remain ample and analysts said this would weigh on prices eventually.

Barkindo said he expected the global oil market to rebalance in the second to third quarters of 2018, earlier than a previous forecast of the year-end.

Crude oil demand will increase globally this year while non-OPEC supply is expected to rise more than expected over the next year, the Organization of the Petroleum Exporting Countries and Russian Federation stated in its monthly report released Thursday.