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AIE expects another saturated oil market next year

A worker on an oil well near New Town, North Dakota.

Daniel Acker | Bloomberg | Getty Images

The International Energy Agency (IEA) is predicting the return of an oversupplied oil market next year, despite the recent reversal of a deal led by the US Energy Agency (IEA). OPEC to limit any overabundance.

The energy agency said the "main message" of its much-watched report was that the supply of oil in the first six months of 2019 exceeded the demand of 0.9 million barrels a day.

"This surplus adds up to the huge stocks built in the second half of 2018, when oil production rose, as demand began to weaken," said IEA, based in Paris on Friday.

"It is clear that the tightening of the market is not a problem at the moment and that any rebalancing seems to be shifted to the future."

OPEC and its allies, led by Russia, have prevented 1.2 million barrels a day from leaving the market since the beginning of the year.

The alliance for energy, sometimes referred to as OPEC +, renewed the deal last week until March 2020 to avoid an accumulation of stocks that could affect prices.

"The much-awaited decision by OPEC Ministers + to extend their production agreement to March 2020 provides guidance, but that does not change the fundamental prospects of an oversupplied market," he said. l & # 39; IEA.

The international benchmark, the Brent, has traded around $ 67.00 on Friday morning, up about 0.7%, while the US WTI (West Texas Intermediate) is up around Is set at 60.59 USD, an increase of about 0.6%.

Fears of slowing global demand led to a 10% drop in Brent in June, despite favorable geopolitical factors, said the IEA.

OPEC against the United States

The energy agency said Friday it is forecasting an increase of 2.1 million barrels a day in non-OPEC oil supplies next year, mainly due to rising US production. This would represent a slight increase from 2 million barrels per day in 2019, which would reduce OPEC's crude oil requirements.

The IEA said that an expected drop in demand for OPEC crude in the first three months of 2020 could result in a drop in the group's output to 28 million barrels a day, its lowest level since the third quarter of 2003.

In a separate monthly report released Thursday by OPEC, the 14-member group said it also expected a drop in global demand for its crude oil while its rivals would increase their production .

OPEC announced in a monthly report its first forecasts for 2020 that the world would need 29.27 million barrels of oil per day, divided among its 14 members in 2020, a decrease of 1.34 million barrels per day compared to this year.

The expected decline in demand for OPEC crude oil highlights the continued dynamism of its policy of reducing the supply of US shales and other rivals. This potentially strengthens President Donald Trump's decision to impose sanctions on OPEC members, Iran and Venezuela.

The United States has surpassed Saudi Arabia and Russia to become the world's largest producer this year.

Earlier this month, JP Morgan's head of oil and gas research for the EMEA region warned that Saudi Arabia and OPEC would act to recover part of its US market share from here not much time.

Global demand growth is expected to rise from 310,000 barrels "exceptionally low" per day in the first quarter of 2019 to 800,000 barrels in the second quarter, to reach 1.8 million barrels per day in the second half of the year, m & # 39; said.

For 2020, the energy agency said the pace of growth would average 1.4 million barrels a day, compared with 1.2 million barrels a day this year.

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