IEA in their monthly report said that global supply growth remained at a strong 3.2 mbd year-on-year in April, exceeding demand by more than 2 mbd.
OPEC crude supply rose in April as Iran and Iraq boosted output and Saudi Arabia held flows above 10 mbd. OPEC production is up nearly 1.4 mbd from last year as the group is defending its market share. Saudi Arabia, the UAE and Kuwait combined are producing at the highest rate in at least three decades, while Iranian output is at its strongest since the sanctions came into effect.
After OPEC abandoned its former strategy of cutting supplies to balance the market, there has been large interest in US oil statistics. US rig counts have dropped by 60% since October, but the effect on oil production has been limited so far. US supply growth is slowly abating, but April output was still 0.82 mbd above last year. The US EIA expects output to drop from June, but remain above 9 mbd.
The question is at which price level US production will return. The rate of decline in the rig count has slowed in recent weeks, and rigs in the Permian shale basin rose last week for the first time this year. Producers such as Chesapeake and Occidental have raised their output guiding. EIA expects production to rebound later this year.
The battle for market share has just started. Expect continued volatility in oil prices...
(Data: IEA, EIA)