The forecasts appear to predict the need for 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 in early 2020, Reuters reported.
“Market tightness is not an issue for the time being and any rebalancing seems to have moved further into the future,” the IEA said in its monthly report.
“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, according to Financial Tribune.
The demand for OPEC crude oil in early 2020 could fall to only 28 million bpd, it added, with non-OPEC expansion in 2020 rising by 2.1 million bpd — a full 2 million bpd of which is 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 US-China trade relations and US economic expansion as encouraging but flagged tailwinds elsewhere.