Oil Glut Keeps Heat on Producers

A global oil glut will continue to put pressure on revenue-hungry producers despite a groundbreaking pact to curb global output and rescue battered prices, the International Energy Agency said Friday.

Supply exceeded demand by a hefty 1.5 million barrels per day in the first quarter of this year, allowing stocks to build heavily, the West’s energy watchdog said.

“Current supply exceeds demand and stocks are high, suggesting a continuation of a difficult market for producers,” the Paris-based agency said in its monthly oil market report.

Members of the Organization of Petroleum Exporting Countries last month approved an agreement to remove 1.245 million barrels a day of its output from the market between April 1 and the end of the year to nudge up prices that had sagged to nine-year lows.

In a rare act of cooperation with OPEC, other producers such as Norway and Mexico pledged cuts last month.

But prices have remained under pressure because of doubts about participants’ resolve to actually carry out the promised reductions.

On Thursday, crude oil traded at $15.56 a barrel. Commodities markets were closed Friday.

Traders said it could be several weeks before firm evidence emerges that crude sales have been cut back.

Producers have seen crude average a punishing $4.50 a barrel less so far this year than in 1997, cutting export earnings for OPEC member countries by $8 billion in the first quarter of 1998.