OREANDA-NEWS. Global oil inventories might not decrease "to the desired level" until close to the end of the current production cut deal between Opec and some non-Opec countries in March 2018, the IEA said today.

Global oil demand increases to 1.4mn b/d next year from 1.3mn b/d in 2017, reaching 99.3mn b/d. But non-Opec supply increases sharply by 1.5mn b/d in 2018 from 660,000 b/d in 2017, according to the IEA, driven "by strong US crude production and further gains from Brazil and Canada", with the UK, Kazakhstan, Ghana and Congo also increasing output.

"Our first outlook for 2018 makes sobering reading for those producers looking to restrain supply," the energy watchdog said in its monthly Oil Market Report (OMR).

The IEA expects US crude production to grow by 430,000 b/d this year, making it 920,000 b/d higher at the end of 2017 than at the end of last year. It anticipates US crude output to grow by 780,000 b/d next year, "but such is the dynamism of this extraordinary, very diverse industry it is possible that growth will be faster".

Commercial oil inventories in developed economies stood 292mn bl above the five-year average in April, after gaining 620,000 b/d from March, more than the seasonal norm. The level is higher than when Opec and some non-Opec countries decided to cut output, the IEA said.

"Our provisional monthly data for May suggests that OECD stocks might, overall, be little changed, but recent US weekly data suggests that rising domestic production, high imports, low exports, and weaker gasoline demand, have combined to send stocks there higher," it said.