[The Squatter of Amon Rûdh]

Morgoth didn't create the Balrogs. They were Maiar that were corrupted to his service at the beginning of the world. As such the Balrog was of the same order as Gandalf.

There were certain limitations placed on the Istari when first they came to Middle-earth: they could feel the same pangs of the flesh as the humans they resembled, and their use of their powers was restricted. When Gandalf was sent back, his powers were greatly increased, although I doubt that he had full use of them. I find it difficult to believe that someone who could defeat a corrupted Maia with limited powers would find it difficult to defeat a corrupted human with those limitations relaxed.