By David Hodari
LONDON--Global oil stocks will still rise in the first quarter of 2020 despite attempts by the Organization of the Petroleum Exporting Countries and its allies to balance the market, the International Energy Agency said Thursday.
In its closely-watched oil-market report, the IEA said it was trimming its 2020 non-OPEC oil supply growth forecast by 200,000 barrels a day to 2.1 million barrels. However, it still expects global inventories to build by 700,000 barrels a day in the first three months of next year.
The agency's prediction came despite last week's news that OPEC and its allies had agreed a new production deal to deepen oil-output cuts by a further 500,000 barrels a day through to the end of March.
That move means the coalition will hold back roughly 1.7 million barrels a day from global oil markets, but it won't be enough to balance the market, the IEA said, adding that it was leaving unchanged its oil demand growth forecasts for both this year and next.
The IEA said it was reducing its production growth forecast "to take account of lower output from participants in the OPEC+ deal and a weaker growth outlook for Brazil, Ghana and the United States."
A stagnant oil price, partly driven by heavy supply from the U.S.--which became a net-exporter in September--was one of the drivers of the new OPEC+ deal.
Even so, "the market has done its own sums and the reaction to oil's new deal has so far been muted," the agency noted.
As a whole, the cartel's production slipped 300,000 barrels a day in November, with Saudi Arabian output down by the same amount after the nation's production swung wildly in the wake of attacks on processing facilities at Abqaiq and Khurais that temporarily downed 5% of global supply.
The rest of the cartel's movements, including slight gains for Kuwait, Ecuador, and cut-exempt Venezuela were balanced by gentle decreases from several other countries.
The IEA's report came the day after OPEC released its own monthly market report, in which the cartel also held its demand growth forecasts for 2019 and 2020, while holding its non-OPEC supply growth forecast at 2.17 million barrels a day.
The two reports also took relatively similar stances on global trade. Torpid economic growth, partly as a thanks to the trade war between the U.S. and China, has been cited as a drag on oil demand growth in numerous reports from the two organizations in 2019.
On Wednesday, OPEC said the "global trade slowdown has likely bottomed out," and the IEA echoed that view on Thursday.
"The deterioration in trade and industrial activity seen in recent months may have come to an end at the start of 4Q19," the IEA said.
Brent crude oil was up 0.5% at $64.01 a barrel and WTI futures were up 0.2% at $58.89 a barrel in early trading Thursday, recouping some of their late Wednesday losses that came after U.S. Energy Information Administration data signaled a build in U.S. crude stocks.
Write to David Hodari at firstname.lastname@example.org