According to the International Energy Agency (IEA), the surge in US crude oil production is likely to affect demand for oil produced by the Organisation of the Petroleum Exporting Countries (OPEC), despite efforts by the group and its allies to cut oil production. The agency estimates oil demand from OPEC members to fall to 28 million barrels a day in the first quarter of 2020, the lowest amount in 16 years and below OPEC’s downwardly revised estimates of 29.3 million barrels per day in 2020.
The IEA is of the view that markets were oversupplied to the extent of 900,000bpd in the first half of this year with the surplus adding to the stock buildup in the second half of 2018. In addition, the slowdown in manufacturing activity across most major economies on the back of trade spats and the ongoing uncertainty surrounding global trade are all affecting worldwide oil demand.
The IEA said that while crude oil production in June increased in the US, Kazakhstan, Brazil, Saudi Arabia, Russia, and Nigeria, cuts were noticed in Iran, Iraq and Angola.
The International benchmark, Brent Crude is up about 22% this year while WTI Crude has gained about 20% YTD.