IEA says oil market may rebalance faster if OPEC sticks to target

World oil demand to grow at a rate of 1.2 million bpd next year, IEA said

Global oil supply could fall into line more quickly with demand if the Organization of the Petroleum Exporting Countries (OPEC) and Russia agree to a steep enough cut in production, but it is unclear how rapidly this might happen until more details emerge, the International Energy Agency (IEA) said on Tuesday.

OPEC, led by Saudi Arabia, agreed last month to cut production to around 32.5 to 33 million barrels per day (bpd) and Russia has signalled it is ready to join in any effort to temper supply and shrink a stubborn global surplus of unwanted crude.

The IEA said in its August report that it expected world oil demand to grow at a rate of 1.2 million bpd next year, keeping its forecast unchanged from last month, but cut its estimate of growth in 2016 by 40,000 bpd to around 1.2 million bpd, from around 1.3 million bpd last month.

"Even with tentative signs that bulging inventories are starting to decline, our supply-demand outlook suggests that the market -- if left to its own devices -- may remain in oversupply through the first half of next year," the IEA said, adding, "If OPEC sticks to its new target, the market's rebalancing could come faster."

"At this stage, it is difficult to assess how the OPEC supply cut, if enforced, will affect market balances," the agency said.

OPEC members meet next month in Vienna.

The IEA forecast a decline of 900,000 bpd in non-OPEC output in 2016 to 56.6 million bpd, and expects a rise of 400,000 bpd in 2017.

Global stockpiles fell for the first time since March, down 10 million barrels to 3.092 billion barrels, just shy of July's record 3.111 billion barrels.