Global oil demand is expected to pick up this year but supply is growing at a faster pace, leading to a rise in inventories in the first quarter of 2018, the International Energy Agency (IEA) said on Thursday, Reuters reports.
The IEA raised its forecast for oil demand this year to 99.3 million barrels per day (bpd) from 97.8 million bpd in 2017.
Commercial oil inventories in industrialized OECD nations rose in January for the first time in seven months to 2.871 billion barrels, 53 million barrels above their five-year average, the Paris-based IEA said.
The January increase of 18 million barrels over the December inventory level was roughly half the size of rises normally seen at this time of year, according to the agency, which advises Western governments on energy policy.
But it said Venezuela, where an economic crisis has cut oil production by 50 percent in two years to lows not seen in more than a decade, could still trigger a renewed drawdown in stocks.
“With supply from Venezuela clearly vulnerable to an accelerated decline, without any compensatory change from other producers, it is possible that the Latin American country could be the final element that tips the market decisively into deficit,” the IEA said.
In a bid to drain inventories, the Organization of the Petroleum Exporting Countries, Russia and several other producers have been implementing a deal to cut output by about 1.8 million bpd from January 2017 until the end of 2018.
Assuming no change in OPEC output for the rest of the year, the IEA said it expected a small increase in OECD inventories in the first quarter of 2018 with declines after that.
The agency said it expected supply from non-OPEC nations to grow by 1.8 million bpd in 2018 to 97.9 million bpd, led by the United States, where crude output was forecast to rise by 1.3 million bpd during 2018 to more than 11 million bpd by the end of the year.