June 14 (UPI) -- Pressure from U.S. oil production and some OPEC members mean market balancing is stalled, the International Energy Agency reported Thursday.
Parties to an agreement led by the Organization of Petroleum Exporting Countries to balance the market through managed production declines decided to extend the arrangement by three months into early 2018. That led to a downturn in crude oil prices as many market watchers were anticipating deeper cuts.
In its monthly market report for June, OPEC economists said Wednesday that the market was balancing in response to the production arrangement, but at a slower pace than expected.
The International Energy Agency mirrored OPEC's sentiments in its own monthly report, saying stronger U.S. crude oil production, which could increase faster than expected, is offsetting OPEC's production aim. By its estimates, total crude oil inventories in industrialized economies are 292,000 barrels above the five-year average.
"Indeed, based on our current outlook for 2017 and 2018, incorporating the scenario that OPEC countries continue to comply with their output agreement, stocks might not fall to the desired level until close to the expiry of the agreement in March 2018," the IEA's report read. "A lot can change of course, but, as we said at the start, 2018 seems a very long way away."
Libya and Nigeria are exempt from the OPEC-led production deal to ensure oil revenue flows to national security efforts. Total OPEC production for May was 32.1 million barrels per day, an increase of about 1 percent, or 336,000 barrels per day, from the previous month.
The American Petroleum Institute published industry reports on U.S. energy levels, finding crude oil stockpiles increased by 2.8 million barrels and gasoline stockpiles increased by 1.8 million barrels last week.
Official figures published last week from the U.S. Energy Information Administration showed a significant build in inventory levels and traders will look to figures out later Wednesday to see if the trend was an anomaly.