Rich Pedroncelli / AP

Oversaturated global oil markets are on a fragile path toward emerging from the supply-demand imbalance that has depressed prices, but that progress is at risk of unraveling as OPEC's compliance with production-limiting targets declines, the International Energy Agency said Friday:

"There would be more confidence that re-balancing is here to stay if some producers party to the output agreements were not, just as they are gaining the upper hand, showing signs of weakening their resolve."

Why it matters: The persistence of the worldwide supply glut that keeps prices at middling levels has created problems for oil-reliant Persian Gulf economies, and affects the output rate and bottom line of U.S. producers, who are forecast to drive production to new records next year.

The IEA's closely watched monthly report takes stock of efforts by OPEC and allied producers, notably Russia, to limit output through at least early 2018. It finds that the 22 countries in the agreement are collectively exceeding the target by 470,000 barrels per day last month.

  • Overall global supply grew by 520,000 barrels per day in July, the third consecutive monthly increase, as output grew Libya and Nigeria (OPEC members that aren't covered by the agreement), as well as the U.S., Canada and elsewhere.

How markets responded: via MarketWatch, the concerns about continued oversupply pushed prices lower on Friday after the IEA report's release.

Yes, but: despite the shaky compliance, IEA says the latest data on the demand side of the equation is helping to re-balance markets. They have increased projected 2017 demand growth to 1.5 million barrels per day over the prior year, and also predict "relatively strong" 2018 growth of another 1.4 million barrels per day.

  • "Producers should find encouragement from demand, which is growing year-on-year more strongly than first thought," they report.
  • IEA notes that prices for Brent crude, the global benchmark, recently stabilized above $50 per barrel, but: "If re-balancing is to be maintained, the producers that are committed to seeing the task through to March 2018 need to convince the market that they are in it together."

Go deeper

Bryan Walsh, author of Future
1 hour ago - Health

Rockefeller Foundation commits $1 billion for COVID-19 recovery

A health worker performs a COVID-19 test in New Delhi. Photo: Raj K Raj/Hindustan Times via Getty Images

The Rockefeller Foundation announced on Monday that it will allocate $1 billion over the next three years to address the pandemic and its aftermath.

Why it matters: The mishandled pandemic and the effects of climate change threaten to reverse global progress and push more than 100 million people into poverty around the world. Governments and big NGOs need to ensure that the COVID-19 recovery reaches everyone who needs it.

Updated 2 hours ago - Politics & Policy

Coronavirus dashboard

Illustration: Sarah Grillo/Axios

  1. Politics: Ex-FDA chief: Pence campaigning after COVID exposure puts others at risk — Mark Meadows: "We are not going to control the pandemic"
  2. Health: 13 states set single-day coronavirus case records last week — U.S. reports over 80,000 new cases for second consecutive day.
  3. World: Italy tightens restrictions Spain declares new state of emergency.
  4. Media: Fox News president and several hosts advised to quarantine after possible COVID-19 exposure

Fox News president and several hosts advised to quarantine in COVID-19 precaution

A political display is posted on the outside of the Fox News headquarters on 6th Avenue in New York City in July. Photo: Timothy A. Clary/AFP via Getty Images

Fox News President Jay Wallace and anchors Bret Baier and Martha MacCallum are among those recommended to get tested and quarantine after possible exposure to COVID-19, the New York Times first reported Sunday night.

The big picture: The Fox News contingent, which also included "The Five" show hosts Juan Williams and Dana Perino, were on a charter flight from Nashville to New York following Thursday's presidential debate with a person who later tested positive for the coronavirus.

Get Axios AM in your inbox

Catch up on coronavirus stories and special reports, curated by Mike Allen everyday

Please enter a valid email.

Subscription failed
Thank you for subscribing!