In the months leading up to March, demand in major oil producing regions like Russia, India, several Middle Eastern countries, Korea and even the US showed signs of slowing, forcing the IEA to slash its yearly estimate to 97.9m barrels per day.
It now predicts that global demand will only grow by 1.3mb/d over 2017, down from the 1.4mb/d previously forecast.
Although the output production pact forged by OPEC members and 11 other countries helped reduce the world oil supply by 755 kb/d in March alone, the IEA expects total non-OPEC output will rise throughout the year.
Even after factoring in pledged cuts as part of the OPEC-led initiative, as well as unplanned outages in Canada and the North Sea, the energy agency said non-OPEC output would grow by 485kb/d, compared with a decline of 790kb/d last year.
Meanwhile, the IEA said the “market is already very close to balance.”
OECD stocks “drew moderately” in February and the IEA anticipates they will dip down further in March.
If OPEC decides to extend the production cut deal a further six months during its meeting on 25 May, this would provide further support to oil prices but imply bigger stock drawdowns, the agency said.
