The International Energy Agency (IEA) says surging U.S. oil output will outpace sluggish global demand and lead to a large stocks build around the world in the next nine months.
IEA said in its monthly report on Friday that market tightness was not an issue for the time being and any re-balancing seems to have moved further into the future.
“Clearly, this presents a major challenge to those who have taken on the task of market management,” it added, referring to the Organization of the Petroleum Exporting Countries and producer allies such as Russia.
The forecasts appear to predict the need for producer club, OPEC, and its allies to reduce production to balance the market despite extending their existing pact, forecasting a fall in demand for OPEC crude to only 28 million barrels per day (bpd) in early 2020.
IEA said the demand for OPEC crude oil in early 2020 could fall to only 28 million bpd.
It added that non-OPEC expansion in 2020 could rise by 2.1 million bpd — a full two million bpd of which was expected to come from the United States.
At current OPEC output levels of 30 million bpd, the IEA predicted that global oil stocks could rise by 136 million barrels by the end of the first quarter of 2020.
Maintaining its forecasts for oil demand for the rest of 2019 and 2020, the Paris-based agency cited expected improvement in U.S.-China trade relations and U.S. economic growth as encouraging.
However, it also flagged weakness in European manufacturing and slower growth in Indian energy consumption.
