The International Energy Agency left its short-term oil demand growth outlook largely unchanged and expects global oil production growth to slow as OPEC members and some non-OPEC countries look to stabilize prices and bring the market toward balance.
In its latest "Oil Market Report" issued Dec. 13, the IEA held its 2018 oil demand growth estimate at 1.3 million barrels per day amid a slowdown due to "relatively high prices." It kept its 2019 outlook at 1.4 MMbbl/d as it expects the impact of lower oil prices to be offset by slowing economic growth, weakening currencies and "downward revisions to certain countries" such as Venezuela.
Global oil supply growth, meanwhile, fell by 360,000 barrels per day month over month in November to 101.1 MMbbl/d due to lower output in the North Sea, Canada and Russia, while OPEC crude oil output rose 100,000 bbl/d to 33.03 MMbbl/d over the same period. Record high output by Saudi Arabia and the United Arab Emirates offset a sharp reduction from Iran, the IEA said.
For 2018, non-OPEC production growth is expected at 2.4 MMbbl/d, while cuts from January are expected to reduce 2019 non-OPEC production growth by 415,000 bbl/d to 1.5 MMbbl/d.
OPEC and some non-OPEC oil ministers agreed Dec. 7 to curb output by 800,000 bbl/d and 400,000 bbl/d, respectively, to address a growing surplus and stabilize prices as Brent crude oil swung from $86/bbl in early October to $58/bbl a little more than a month later. Since the announcement, Brent prices have held close to $60/bbl and West Texas Intermediate crude oil has held at about $52/bbl.
"Time will tell how effective the new production agreement will be in re-balancing the oil market," the IEA said.
The next meeting of the Vienna Agreement countries takes place in April 2019.