In its monthly Oil Market Report for April released Thursday morning, the International Energy Agency (IEA) said that global crude supplies fell by 755,000 barrels per day in March, primarily due to lower output from both OPEC and non-OPEC producers. Total fourth-quarter 2016 supply averaged 97 million barrels a day, an increase of about 400,000 barrels a day compared with fourth quarter 2015 supply.

The IEA projects global demand growth of 1.3 million barrels a day for 2017, down from 1.4 million barrels a day in the report for February.

OPEC crude oil production fell by 365,000 barrels a day to 31.68 million barrels in March. Declines in OPEC production were attributed to output losses in Libya and Nigeria, both of which are exempt from the agreed production cuts, and lower production from Saudi Arabia. The IEA expects non-OPEC output to rise by 400,000 barrels a day in 2017.

Commercial inventories in OECD nations increased by an estimated 38.5 million barrels in the first quarter of 2017 (425,000 barrels a day). Stockpiles in floating storage or stored in smaller facilities dropped by an estimated 325,000 barrels a day in the first quarter.

Regarding prospects for continued production cuts and higher prices, the IEA said:

Even at this mid-way point, we can consider what comes next. It is of course OPEC’s business to decide on its output levels, but a consequence of (hypothetically) extending their output cuts beyond the six-month mark would be bigger implied stock draws. This would provide further support to prices, which in turn would offer further encouragement to the US shale oil sector and other producers.

[W]e expect production will grow again on a year-on-year basis by May. For the full year, we see growth of 485 kb/d [thousand barrels per day], compared to a decline of 790 kb/d in 2016. The main impetus comes from the US where monthly data shows that output reached 9.0 mb/d [million barrels per day] in March, up from a trough of 8.6 mb/d in September 2016. We now expect that US production will be 680 kb/d higher at the end of the year than it was at the end of 2016, an upgrade to our previous forecast.

Just before noon Thursday, West Texas Intermediate crude for May delivery traded at $53.11 a barrel, flat with Wednesday’s closing price. Brent crude for June delivery traded down about 0.1% at $55.77 a barrel in London.

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