The International Energy Agency said in its latest Oil Market Report that the supply overhang has pretty much vanished, thanks to OPEC's efforts at limiting production. "It is not for us to declare on behalf of the Vienna agreement countries that it is 'mission accomplished', but if our outlook is accurate, it certainly looks very much like it," the Paris-based energy agency wrote.
Market fundamentals are on a similar track compared to last month's report. The IEA kept its oil demand forecast at 1.5 million barrels per day (mb/d), although it noted that the back-and-forth on trade tariffs between the U.S. and China puts the demand outlook at risk. For example, a 1 percent decline in global GDP growth would result in a reduction in demand growth by 690,000 bpd. "Oil demand would suffer the direct impact of lower bunker consumption and lower inland transportation of traded goods, reducing fuel oil and diesel use," the IEA said. Still, the negative effects of a trade war remain to be seen.