Consequently, without a commitment to actually cut oil production, which Saudi Arabia’s oil minister Ali al-Naimi has ruled out, the IEA argued that the world will likely continue to pump out more oil than it is ready to consumer throughout 2016, even after the “much-anticipated” decline in U.S. shale oil production.
Specifically, the IEA projects oil stocks to expand by 1.5 million barrels per day in the first six months of 2016 and then slow to 200,000 barrel per day in the second half of the year due to a drop in high-cost production, like U.S. shale oil.
The agency also added that a “tighter” supply and demand balance was already being reflected in prices.
Moreover, the IEA has warned that it may even lower oil demand forecasts amid slowing economic activity, which seems more likely after the International Monetary Fund already cut its global economic outlook. For now, the IEA has not made significant revisions to its demand forecasts in light of the recent IMF growth projections.
United States Oil Fund