Oil demand worldwide will rise more strongly than expected in 2016 and 2017 according to the International Energy Agency.
In its monthly oil market report, the IEA said revisions to its estimate of Chinese and Russian consumption had prompted it to raise its forecast for global oil demand growth this year and next.
For 2016 it lifted its forecast by 120,000 barrels per day (bpd) to 1.4 million bpd, and for 2017 by 110,000 bpd to 1.3 million bpd.
The agency said it was too soon to assess the impact of a promised cut in supply by the world’s largest producers, but it does see crude oil stockpiles declining.
A re-balancing of world oil markets could occur in the first half of next year if production cuts by OPEC and other producers are implemented, International Energy Agency chief Fatih Birol said.
Birol told a conference in Prague that higher oil prices would weaken global demand.
“If OPEC and its non-OPEC partners stick to their pledges, global inventories could start to draw in the first half of 2017,” the IEA said, adding that this was not its own forecast, but was based on the agreement.
“The deal is for six months and we should allow time for it to be implemented before re-assessing our market outlook. Success means the reinforcement of prices and revenue stability for producers after two difficult years; failure risks starting a fourth year of stock builds and a possible return to lower prices,” the Paris-based organisation said.
The IEA said global oil supply rose to a record 98.2 million bpd in November.