IEA forecast sharp drop in oil glut

The international energy agency says the recent deal by OPEC and not cartel producers to cut output will lead to a supply deficit in the first quarter of 2017 and the comment is providing fresh lift for oil price Tuesday.

Brent which began the day in Asia at $55.51 a barrel is racing towards the $56 mark with several analysts raising their forecast for oil price next year.

Nigeria one of the countries not affected by the output cut stands to benefit substantially if it can get production at the target of 2.2m barrels daily.

Oil prices raced to their highest in 18 months Monday morning in the euphoria following the announced cut in production from non-OPEC countries over the weekend.

Analysts say on paper, OPEC’s supply deal could drain almost half the global oil glut within six months.

Record inventories accumulated since 2014 will dwindle at a rate of about 760kbbl/day in the first half of next year if OPEC and 11 other oil producers deliver the supply cuts pledged on December 10, according to Bloomberg calculations using data from the IEA.