IEA forecasts strong oil demand in Q3 and Q4.

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11 Aug, 2017

IEA forecasts strong oil demand in Q3 and Q4

Despite rising crude production from North America coupled with weak OPEC compliance to stem output, the International Energy Agency (IEA) said on Friday that global oil demand will grow more quickly this year than expected.

Previously, the agency predicted demand to be around 1.4 million barrels per day (bpd). However, they have since revised that forecast to 1.5 million bpd. Furthermore, they also said that they anticipate demand to expand by a further 1.4 million bpd next year.

In June 2017, The Organization of the Petroleum Exporting Countries known as OPEC decided to extend a deal to reduce output to curb a global glut. The deal, extended until March 2018, will see OPEC reduce output by an average of 1.2 million bpd, whilst Russia and other non-OPEC producers cut half as much.

The agreement has so far seen some but yet limited success with OPEC often struggling to adhere to its cuts. In fact, the IEA said OPEC's compliance with the cuts had fallen to 75% in July, the lowest this year.

However, despite this, the IEA also said that "producers should find encouragement from demand, which is growing year-on-year more strongly than first thought".

They added: "There would be more confidence that rebalancing is here to stay if some producers party to the output agreements were not, just as they are gaining the upper hand, showing signs of weakening their resolve".

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