“This is likely to dampen prospects of a significant increase in oil prices”, concluded the IEA.
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Consumer demand is moving higher as more travelers take to the road amid historically low fuel prices.
In its monthly report Tuesday, the IEA said that oversupply for the first half of the year was 800,000 barrels a day, down from the 1.5 million barrels the agency expected.
USA crude for July delivery recently fell 38 cents, or 0.8%, to $48.50 a barrel on the New York Mercantile Exchange.
It added that the second factor “has been unexpected supply cuts”. Rigs that focus on oil in the US and Canada rallied as American output rose in the week thru June 13 for the first time in three months.
There was a sharp increase in gasoline stocks of 2.25mn barrels compared with an expected draw of around 1.3mn, while distillates inventories increased sharply by 3.73mn barrels compared with an expected draw of around 0.75mn.
“Investors are spooked about the prospects of a United Kingdom exit from the European Union, the economic impact of a potential USA rate rise in the summer, and renewed demand concerns out of China”, he added. Inventories will build slightly in the first half of 2017 and decline slightly by the second half of the year. “Less oil has been stockpiled than we originally expected” as “oil demand growth has been significantly stronger” and “unexpected supply cuts” strained the availability of crude.
In London, Brent North Sea crude for delivery in August finished at $48.97 a barrel, down 86 cents from Tuesday s settlement. USA output will shrink by 150,000 barrels a day in the quarter 3 2016 compared with the first half as producers cut production due to a low oil price environment.
“In short, this data will do little to move the needle in either direction for oil prices, and the energy market will continue to get its cue from the macro-economic environment and global equity markets”.
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The IEA also made its first forecast for the oil market into 2017 pencilling in demand growing at the same rate as in 2016 – 1.3 mb/d, and non-OPEC supply growing by a modest 0.2 mb/d.
