The International Energy Agency (IEA) expects the return of an oversupplied oil market next year, despite the recent rollover of an OPEC-led pact designed to restrain any glut.
Moreover, The energy agency said the “main message” of its closely-watched report was that oil supply in the first six months of 2019 had exceeded demand by 0.9 million barrels per day.
Also, OPEC and its allies, have kept 1.2 million barrels per day off the market since the start of the year.
Furthermore, The energy alliance, last week renewed the pact until March 2020 to avoid a build-up of inventories that could hit prices.
“The widely-anticipated decision by OPEC+ ministers to extend their output agreement to March 2020 provides guidance but it does not change the fundamental outlook of an oversupplied market,” the IEA said.
International benchmark Brent crude traded at around $67.00 Friday morning, up around 0.7%.
U.S. West Texas Intermediate (WTI) stood at $60.59, around 0.6% higher.
Concerns that global demand is slowing caused Brent to decline by 10% in June, despite supportive geopolitical factors, the IEA said.
OPEC vs. the U.S.
The energy agency said Friday that it expects a 2.1 million barrels per day expansion of non-OPEC oil supply next year, largely driven by soaring U.S. production.
That would mark a slight increase from 2 million barrels per day in 2019, lowering the requirement of OPEC crude.
In fact, This is the lowest level since the third quarter of 2003.
In a separate monthly report published by OPEC on Thursday, the 14-member group said it also expected world demand for its crude to fall next year as rivals ramp up production.
Giving its first 2020 forecasts in a monthly report, OPEC said the world would need 29.27 million barrels per day.
However, An expected fall in demand for OPEC crude highlights the sustained boost its policy of supply cuts is giving to U.S. shale and other rivals.
It potentially reinforces President Donald Trump’s decision to impose sanctions on OPEC members Iran and Venezuela.
The U.S. has overtaken Saudi Arabia and Russia to become the world’s top producer this year.
For 2020, the energy agency said the pace of growth would average 1.4 million bpd.
This report is taken from CNBC
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