In light of the uncertainties affecting the global oil market and in an effort to avoid a destabilising build-up in oil inventories, the report indicated that Opec and non-Opec countries participating in the Declaration of Cooperation agreed to extend voluntary production adjustments until 31 March 2020, reaffirming their continued commitment to promote and enhance oil market stability.
For example, although USA crude inventories have decreased for four consecutive weeks, according to the Energy Information Administration (thus implying that demand is robust despite grim economic forecasts), the Organization of the Petroleum Exporting Countries (OPEC) this week blamed growing US oil production for its forecast that world demand for crude will decline next year (thus implying a return of a surplus despite the cartel extending its output cuts to next year). But supply is now well in excess of demand, said the Paris-based institution that provides advice to oil-consuming nations. It said that despite "an exceptionally weak" rate of growth during the first quarter-310,000 bpd-and more robust growth of 800,000 bpd during the second quarter, global oil demand would grow by an average 1.8 million bpd in the second half of the year.
According to the agency's latest data, there was a global surplus in the second quarter of 0.5 million barrels per day, compared to previous expectations of a deficit of about the same amount.
'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.
The interest for OPEC unrefined petroleum in mid-2020 could tumble to just 28 million bpd, it included, with non-OPEC extension in 2020 ascending by 2.1 million bpd - an entire 2 million bpd of which is required to originate from the United States.
"The main area of focus remains demand growth", the IEA said.
The IEA said that it was sticking for the time being to its current forecasts for economic growth, but "there are indications of deteriorating trade and manufacturing activity".
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.
"Factors that could influence the pace of oil demand growth in 2020 include macroeconomic developments in major consuming countries, the displacements of heavy distillates with natural gas and other fuels, subsidy programmes and plans for their removal, the effect of commissioning/delays/closures of mega projects in the downstream and fuel efficiency programmes, especially in the transportation sector", the report said.