IEA: oil markets to see another glut in 2020

IEA: oil markets to see another glut in 2020

The International Energy Agency (IEA) expects the return of an oversupplied oil market next year, despite the recent rollover of an OPEC-led pact designed to restrain any glut.

The energy agency said the "main message" of its report was that oil supply in the first six months of 2019 had exceeded demand by 0.9 million barrels per day.

"This surplus adds to the huge stock builds seen in the second half of 2018 when oil production surged just as demand growth started to falter," the IEA said in a report. "Clearly, market tightness is not an issue for the time being and any re-balancing seems to have moved further into the future."

"The widely-anticipated decision by OPEC+ ministers to extend their output agreement to March 2020 provides guidance but it does not change the fundamental outlook of an oversupplied market," CNBC cited the report as saying.

The energy agency said that it expects a 2.1 million barrels per day expansion of non-OPEC oil supply next year, largely driven by soaring U.S. production. That would mark a slight increase from 2 million barrels per day in 2019, lowering the requirement of OPEC crude.

The IEA said an expected drop in demand for OPEC crude in the first three months of 2020 could see the group’s production fall to 28 million barrels per day — its lowest level since the third quarter of 2003.