KUWAIT, March 28 (KUNA) -- The mismatch between oil supply and demand has increased further this quarter, rising from 2.0 to 2.3 million barrels per day (mb/d), according to Asia Capital Annual Report.
The report noted that the key reason is the decline in demand, which fell 0.6 mb/d compared to the previous quarter, adding that Global supply decreased by 200,000 barrels per day in February.
Moreover, prices are not responding to the glut. Instead of falling, oil prices have been trending upward since the end of January, driven by hopes that major oil producers will join an output freeze agreement - a meeting is set for mid-April.
If the agreement takes place, its effect will be limited, as the countries involved are already producing near record levels. Those that are not, Libya and Iran, are unlikely to join. Iran has claimed that it will not halt production until it reaches 4.0 mb/d, the report added.
With flat growth in Europe and Japan, and the US, China and most emerging markets decelerating, the report projected a 0.3 percentage point decline in global growth and a 0.8% YoY increase in oil demand.
On the supply front, the report assumed an increase in Iranian output, other OPEC countries' output to remain around January levels - whether a freeze agreement takes place or not.
Taking all these factors into account, supply will continue to exceed demand in 2016 by 2.0 mb/d, as much as last year when the price of Brent crude averaged around USD 50 per barrel. (end)