Low oil prices and an improvement in economic growth have driven up demand for oil across the world, though supply continues to outpace demand, according to a new report from the International Energy Agency.
In its June report the Paris-based group that monitors the world's energy supply pointed to a decline in production from non-OPEC sources, which has helped narrow the gap between supply and demand.
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The huge surplus of oil produced over oil consumed brought the price of a barrel of crude down from $107 last year to a low of $45 earlier this year.
But the recovery in demand has helped put a floor on the price, with West Texas Intermediate oil trading at $60.36 US a barrel today. The IEA says imbalances in refining capacity — mainly a shortage of refining capacity for some high-demand areas, have contributed to price stability in the last six weeks.
Driving more in U.S.
Among the big users are U.S. drivers, who have driven up demand for gasoline by 4.2 per cent in the past year, the IEA reports.
Though Chinese industrial demand has fallen, Chinese consumers are also buying more petroleum products as they take to a driving lifestyle.
First quarter demand was boosted by a cold winter in Europe, but economic recovery also played a role, the IEA said.
Going forward, demand won't be as strong for the rest of the year, because prices are up, discouraging consumers, it said.
"This partial rebound lessens, at least for now, support to demand across much of the world," the report said,
The IEA's estimate of global demand growth has been revised up to 1.7 million barrels a day for the first quarter and 1.4 million barrels a day for 2015 as a whole. That's 300,000 barrels a day more than it previously estimated, bringing total global demand to 94 million barrels a day.
Still got more than we can use
Meanwhile global supply fell in May to 96 million barrels a day, but was still three million barrels a day more than this time last year.
It is non-OPEC output, mainly the U.S. shale producers, who have pulled back. The Organization of Petroleum Exporters boosted supply to 31.33 million barrels a day in May as Saudi Arabia, Iraq and the UAE pumped at record levels.
OPEC's decision earlier this month to maintain output at current levels almost guarantees a continued oversupply of crude that will keep a lid on prices.
"Despite signs of a slowdown in non-OPEC supply, notably in the U.S., global production growth remains exceptionally high. As a result, oil inventories have soared, but their breakdown by product and region doesn't quite match that of demand," the report said