A worker at an oil drill near New Town, North Dakota.
Daniel Acker Bloomberg | Getty Images
The International Energy Agency (IEA) expects the oil market to be handed over next year, despite the recent transposition of an OPEC-led pact designed to limit any glut.
The Energy Agency said the "main message" in its closely watched report was that oil supply in the first half of 2019 exceeded demand by 0.9 million barrels per day.
"This surplus adds to the huge warehouses seen in the second half of 201
"It is clear that market tightness is not a problem at the moment and any rebalancing seems to have gone further into the future."
OPEC and its allies, led by Russia, have held 1.2 million barrels a day outside the market
The Energy Alliance, sometimes referred to as OPEC +, last week renewed the pact until March 2020 to avoid building inventory who could beat prices.
"The generally expected decision of the OPEC + ministers to extend their production agreement until March 2020 provides guidance, but it does not change the basic conditions for an overcharged market," said the IEA.
International benchmark Brent crude trading is trading at around USD 67.00 on Friday morning, about 0.7%, while the US West Texas Intermediate (WTI) was $ 60.59, about 0.6% higher.
Concerns that global demand slowed Brent to fall by 10% in June despite the supporting geopolitical factors, IEA said
OPEC vs USA
The Energy Agency said on Friday that it expects an expansion of 2 million barrels per day on oil production without OPEC next year, largely driven by high US production. This would mean a slight increase from 2 million barrels per day in 2019, which reduced the requirement for OPEC crude oil.
The IEA said that an expected decline in demand for OPEC crude oil in the first three months of 2020 could see the Group's production falling to 28 million barrels per day – the lowest level since the third quarter of 2003.
In a separate monthly report that published by OPEC on Thursday said the 14-member group also expected the world's crude oil demand to fall next year as rivals
According to its first 2020 forecasts in a monthly report, OPEC said the world would need 29.27 million barrels a day raw from its 14 members in 2020, down 1.34 million barrels a day from this year.
An expected decline in demand for OPEC commodity highlights the continued increase in supply policy giving US shale and other rivals. It potentially reinforces President Donald Trump's decision to impose sanctions on OPEC members Iran and Venezuela.
The United States has taken over Saudi Arabia and Russia to become the world's leading producer this year.
Earlier this month, the head of EMEA's oil and gas research led JP Morgan warned Saudi Arabia and OPEC would act to recover some of its US market share for too long.
Global demand growth is expected to accelerate from an "exceptionally weak" 310,000 barrels per day during the first quarter of 2019 and 800,000 in the second quarter, reaching 1.8 million barrels a day throughout the second half, the IEA said.
In 2020, the Energy Agency said that growth would have an average of 1.4 million barrels per day, compared to 1.2 million barrels a day this year.