The IEA (International Energy Agency) has indicated that global oil stocks may increase swiftly, in spite of the agreement between OPEC and its allies to enhance production cuts. The Agency also said the production for the United States and other non-OPEC countries may experience a significant amount of decline. The Paris-based agency IEA said in a monthly report that global oil stocks may increase by 700,000 barrels in the 1st quarter of 2020, despite the additional cuts and decreasing expectations for non-OPEC supply growth in 2020 to 2.1 million barrels a day. It is noteworthy that the OPEC (Organization of Petroleum Exporting Countries) and other oil producers, including Russia, agreed to put down additional production by 500,000 barrels a day during the 1st quarter of 2020. It would balance the market and support prices.
The Agency added the production of member states is suffering from political issues, including Venezuela, Iran, and Libya. Only 530 thousand barrels a day crude oil will be withdrawn from the market compared to November production if the OPEC group strictly follows the new agreement. The IEA revised its forecast for non-OPEC supply growth in 2020 by 200,000 barrels a day because of a continuing slowdown in the United States. It has lessened expectations for Brazil and Ghana and additional cuts from OPEC allies.
Last week, oil prices declined on the back of official data on the rise in the U.S stocks, but it has now shown a significant amount of increase since Thursday. The Brent crude futures showed an increase of 0.44% (20 cents) to 64 U.S dollars per barrel. Yesterday, it was at 63.72 U.S dollars. The U.S crude futures showed a slight increase of 0.19% (11 cents) at 58.87 U.S dollars a barrel. It was at 58.76 U.S dollars on Wednesday. The OPEC monthly report and U.S inventory data were behind this sudden increase. It is important that the U.S Energy Information Administration data showed the oil inventories in the United States increased by about 0.8 million barrels. Moreover, the oil production of the United States fell from the highest level in its history during the last week to 12.800 million barrels per day.