Oil prices tumbled on Wednesday after an unexpectedly large buildup in gasoline stockpiles and the US dollar fell after weak data made investors question the current path of interest rate increases from the Federal Reserve.
Crude prices have fall by more than 10 percent since late May, pulled down by an supply glut that persists despite a move led by the Organization of the Petroleum Exporting Countries (OPEC) to cut production by nearly 1.8 million barrels per day (bpd) until the end of the first quarter of 2018.
The U.S., Brazil, Canada and other producers outside OPEC will increase output next year by the most in four years, the IEA said in its first forecast for 2018.
Oil prices have fallen by about 10% since Opec and non-member countries including Russian Federation recently agreed to extend production cuts until the end of March 2018. Brent futures are trading at higher prices for further-dated contracts, which is an encouragement for more production rather than less.
But those efforts have been blunted by a massive boom in production by USA shale operators, who have become much more efficient.
USA stocks mostly fell while the American dollar cut its losses overnight after the Federal Reserve delivered a widely expected interest rate hike.
OPEC members made a decision to cut production by 1.2 million barrels per day. In addition, pent-up demand for hedging will pressure any moves higher in the oil market, he said.
The increase in exports via tanker was also reflected in higher output by the group, which said in a report on Tuesday that it produced 32.14 million bpd in May, up 336,000 bpd from the prior month.
The OPEC-led effort established a floor under crude oil prices during the first quarter of around $50 per barrel, though that has emerged recently as a ceiling because of production gains from the United States, with some OPEC members exempt from the agreement and even some operating within the multilateral arrangement.
The International Energy Agency says OPEC's plan to cut production and support prices are likely to be undone by increased output in non-OPEC countries like the U.S.
Brent crude futures extended losses after the report, falling 64 cents on the day to $48.08 a barrel by 0804GMT, from around $48.26 prior to the release.