The IEA also estimates that US production will rise to 10 million barrels a day next year and that global crude stocks are around 292 million barrels over their five-year average.
West Texas Intermediate crude, the USA benchmark, dropped 21 per cent from a close of US$54.45 (S$75.34) on February 23, entering a bear market, which kicks in when settlement prices fall at least 20 per cent from their peak.
That is closing in on a bear market, which kicks in when settlement prices fall 20 percent from their peak. The effort has been balanced, however, by an increase in oil production from shale basins in the United States, which have been more resilient to lower crude oil prices than expected.
Saudi Energy Minister Khalid al-Falih attends a session of the St. Petersburg International Economic Forum (SPIEF), Russia, June 2, 2017.
"Lack of major upside price response to the Opec output cuts upping the odds of reduced compliance to the agreement in our opinion", Jim Ritterbusch, president of Chicago-based energy advisory firm Ritterbusch & Associates, said in a note.
The June STEO forecasts a 2017 average spot price for Brent crude oil of $53/barrel (b), with prices increasing to $56/b in 2018.
On the New York Mercantile Exchange, light, sweet crude futures for delivery in July fell 2.2% lower to settle at $43.23 a barrel. "The sentiment that I have been hearing from clients is that their concern is demand's not there and there's too much supply growth in the U.S".
Hedge fund managers have become very bearish about the outlook for oil prices as production from countries outside OPEC grows and threatens to undermine the effectiveness of OPEC's output controls. USA inventories probably shrank by 1.2 million barrels last week, according to a Bloomberg survey before Energy Information Administration data Wednesday. The International Energy Agency warned last week that the USA will lead a surge in non-OPEC supply next year that will outpace growth in global demand.
"We're awash in oil and the biggest issue you have is global demand as a whole that's just slowly improving, but not at the pace needed to get the re-balancing". USA drillers targeting crude added rigs for a 22nd straight week, the longest stretch in three decades, according to data Friday from Baker Hughes Inc.
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