World crude oil markets are set to remain oversupplied next year despite the additional output cuts that OPEC and its allies recently pledged to enact, according to the International Energy Agency (IEA).
In its latest edition of its monthly Oil Market Report (OMR), the IEA said that global oil supplies were likely to outstrip demand by around 700,000 barrels per day (bpd) in 2020. The overhang is likely to persist all through the year, since rising production in the US and other non-OPEC states will overshadow the reductions that the OPEC-plus group is due to make in the first quarter, it said.
Meanwhile, commodities traders appear to be taking these expectations of higher non-OPEC production into consideration. Oil prices have remained relatively low since OPEC-plus announced its new policy, the agency said.
“The market has done its own sums, and the reaction to oil's new deal has so far been muted,” said the IEA.