Demand for oil is expected to slow for the second year in a row, the International Energy Agency has said, according to BBC News.
The agency trimmed forecasts for global demand this year by about 100,000 barrels a day to 1.3 million a day.
The agency said oil stocks across industrialized nations fell by 17.2 million barrels in March, resulting in an increase of 38.5 million barrels, or 425,000 barrels per day, in the first three months of the year.
For 2017, the IEA said it expects non-OPEC supply to rise by 485,000 bpd, above its previous estimate of 400,000 bpd, led by increases in US production growth. U.S. output already reached 9 million bpd last month after hitting a trough last September of 8.6 million bpd, spurred on by higher oil prices.
On the demand side, the IEA revised down its estimates for the worldwide thirst for oil, meaning there will be more oil available than previously thought.
Brent and WTI have rallied in recent sessions after Saudi Arabia was reported to be pushing fellow members of the Organization of the Petroleum Exporting Countries (OPEC) and some rivals to prolong supply cuts beyond June. Opec meets on May 25 to decide whether to extend its supply deal for another six months.
The IEA made no prediction about such a likelihood, but said that a effect of OPEC "hypothetically" renewing the deal would be to support prices more and give further encouragement to U.S. shale oil producers.
As with Wednesday's report from Opec in Vienna, the IEA sees the USA as the main contributor to net growth this year of almost 500,000 bpd after a dip last year of almost 800,000 bpd, with the U.S. expected to raise production by 680,000 bpd.
Oil prices declined today, with U.S. benchmark WTI futures down 10 cents at Dollars 53.01 per barrel, and Europe's Brent contracts four cents lower at USD 55.82.
The net result is that global stocks might have marginally increased in 1Q17 versus an implied draw of about 0.2 mb/d.
With the increasing rig count pointing to rising supply, Tony Headrick, energy market analyst at CHS Hedging, said OPEC would be watching. "We have an interesting second half to come". "A outcome of extending their output cuts beyond the six-month mark would be bigger implied stock draws, [but] this would provide further support to prices, which in turn would offer further encouragement to the United States shale oil sector and other producers".