Sept. 21 (UPI) -- Despite multilateral efforts to balance the oil market with managed production cuts, the situation in general still favors the supply side, the IEA said.
The Organization of Petroleum Exporting Countries in January started implementing an arrangement to sideline the equivalent of about 2 percent of the world's demand for oil in an effort to draw on the five-year level of crude oil held in global stockpiles. Parties to a committee monitoring the impacts of the agreement meet later this month, after already extending the original terms by another three months earlier this year.
Commentary from the International Energy Agency, published late Wednesday, said long-term trends matter when looking for signs of balance.
"Crude oil has been significantly oversupplied in the last three years," commentary from market analyst Kristine Petrosyan read. "Despite supply cuts from OPEC and some non-OPEC participants, 2017 as a whole still sees an oversupplied market as refining demand is relatively subdued, assuming OPEC production remains flat from August through the end of the year."
Economists at the Organization of Petroleum Exporting Countries said in their monthly market report for September that total commercial oil stocks for members of the Organization for Economic Cooperation and Development were 195 million barrels above the five-year average and 123 million barrels above the seasonal norm.
Total OPEC production, based on August figures from secondary sources, is about 0.3 percent higher than the average for 2016 and 3 percent higher in 2015, when the price of oil began to lose grip on $100 per barrel for the foreseeable future. OPEC in its latest forecast, however, raised its expectations for global demand.
Petrosyan said a lot of the balance scenarios depend on China, the world's second-largest economy behind the United States. If stock levels from China are taken out of the balance figures, the market looks more balanced. By her calculations, the Chinese market was oversupplied by 1 million barrels of oil per day during the first half of the year.
"Since 2015, most of the excess crude oil has found a home in China," her commentary read.