The global oil market is to experience a glut throughout 2019, as heightened exploratory activities lead to increased output in the face of slowing consumption.
The agency retained its forecast for global demand growth for 2018 and 2019 from last month at 1.3 million barrels per day (bpd) and 1.4 million bpd, respectively, but reduced its forecast for non-OECD demand growth.
For the first half of 2019, based on its outlook for non-OPEC production, global demand, and assuming flat OPEC production, the IEA said the implied stock build is 2 million bpd.
Output around the world has swelled since the middle of the year, while an escalating trade dispute between the United States and China threatens global economic growth.
Also, there are market projections that OPEC and its partners are discussing a proposal to cut oil output by up to 1.4 million bpd for 2019 to avert an oversupply that would weaken prices.
Since early October, the oil price has fallen by a quarter to below $70 a barrel, its lowest in eight months, which may protect demand to an extent, the IEA said.
“While slower economic growth in some countries reduces the outlook for oil demand, a significant downward revision to our price assumption is supportive,” it added.
The agency raised its forecast for oil output growth from countries outside the Organization of the Petroleum Exporting Countries to 2.4 million bpd this year and 1.9 million bpd next year, unlike its previous estimate of 2.2 million bpd and 1.8 million bpd, respectively.
The United States will lead output growth as the IEA estimates total U.S. oil supply will rise by 2.1 million bpd this year and another 1.3 million bpd in 2019, from a current record of more than 11 million bpd.
“Next year, there is expected to be even less need for OPEC oil due to relentless growth in non-OPEC supply,” the IEA said, adding that it had cut its forecast for demand for OPEC crude by 300,000 bpd to 31.3 million bpd in 2019.
Inventories of oil in OECD countries rose by 12.1 million barrels in September to 2.875 billion barrels, the IEA said, adding that for the third quarter as a whole, stocks rose 58.1 million barrels, or at a rate of 630,000 bpd, the biggest increase since 2015.