Global crude oil inventories could rise despite a deal between OPEC and its crude exporting allies to deepen output cuts, the International Energy Agency (IEA) said in a report on Thursday.
“Despite the additional curbs and a reduction in our forecast of 2020 non-OPEC supply growth to 2.1 million barrels per day (bpd), global oil inventories could build by 700,000 bpd in Q1 (first quarter) 2020,” the report said.
Last week, the OPEC and its allies, known as OPEC+, took financial markets by surprise with a deeper-than-expected cut in oil supply, triggering a jump in prices.
The oil producing countries agreed to deepen an existing output cut deal by 500,000 bpd, bringing the total cut to 1.7 million bpd.
The Paris-based agency said that even if all the countries complied with their new allocations and Saudi Arabia delivered the rest of its voluntary cut of 400,000 bpd, the fall in output will only be about 500,000 bpd compared to current levels.
The IEA also cut its forecast for 2020 non-OPEC production growth by 200,000 bpd to reflect lower output from OPEC allies and a weaker growth outlook for Brazil, Ghana and the United States.
The agency noted that the US is still a major crude oil importer, despite momentarily becoming a net oil exporter.
“Quality issues and greater market competition indicate that the United States will remain a major crude importer,” it added.