April 13 (UPI) -- Higher oil prices mean more production from the United States, leaving the global market with more oil than last year, the International Energy Agency said.
"Even after taking into account production cut pledges from the eleven non-OPEC countries, unplanned outages in Canada as well as in the North Sea, we expect production will grow again on a year-on-year basis by May," the IEA noted in a report issued Thursday.
Members of the Organization of Petroleum Exporting Countries agreed to cut about 1.2 million barrels of oil per day through a deal that went into force in January. The latest monthly market report from OPEC economists said contributing members are cutting more than the agreement outlines.
OPEC's agreement, which counts major oil producers like Russia as contributors, helped establish a floor under crude oil prices of $50 per barrel. Oil prices dropped below $30 per barrel in early 2016 as U.S. crude oil production gains added to a market where OPEC was defending a market share with more robust output.
"So far, the game has gone fairly well for producers," the IEA's report read. "Prices have stabilized again recently after falling by about 10 percent in early March, with recent unplanned outages and rising political tension in the Middle East playing a role."
Crude oil prices dipped in March on signs of lingering supply-side strains in the United States, the world's No. 1 economy. U.S. military strikes on Syria targets gave market players the jitters, however, and have contributed to emerging bullish sentiments.
Olivier Jakob, managing director of Switzerland-based consultant Petromatrix, said in a daily newsletter it may be the second half of the year before balance returns.
"According to the OPEC assumption, maintaining the current cuts would still lead to a global stock-build in the second quarter and the third quarter would be the main quarter to see a drop of global stocks," he said in his report.
Overall, however, the IEA said gains in crude oil prices are making U.S. shale oil recover as operators respond to the improved market conditions.
"For the full year, we see growth of 485,000 barrels per day, compared to a decline of 790,000 barrels per day in 2016," the IEA said. "The main impetus comes from the United States."
Federal data show U.S. output at about 9 million barrels per day. Vandana Hari, an industry analyst for Vanda Insights, told UPI that some of the older data on global stocks of oil isn't as helpful as weekly metrics. With European growth still "anemic," she said the U.S. market is one of the main contributing factors to the price of oil.
"On balance, market sentiment will continue to be swayed by the weekly U.S. stocks data," she said.