The Joint Technical Committee, which advises the group of oil-producing nations that includes Saudi Arabia and Russia, met on Tuesday ahead of a ministerial meeting on Thursday to decide output policy.
“Despite the ongoing destocking of commercial OECD stocks, they remain above the 2015-2019 average, while recognising that prevailing volatility in the market structure is a signal of fragile market conditions,” the panel said in the report.
Under its base case scenario, it expects oil demand to grow by 5.6 million barrels per day this year, down by 300,000 bpd from its previous forecast.
It also raised its global supply growth forecast by 200,000 bpd to 1.6 million bpd.
As a result, it sees oil stocks in the industrialised world dipping below the 2015-2019 average in August, a month later than it previously forecast.
The Organization of the Petroleum Exporting Countries and allied producers, a group known as OPEC+, are curbing output by just over 7 million bpd to support prices and reduce oversupply. Saudi Arabia has added an additional one million bpd to those cuts.
Saudi Arabia is prepared to support extending oil output limits and is also ready to prolong its own voluntary cuts, a source briefed on the matter told Reuters on Monday.
JP Morgan in research note said it believes OPEC+ will tread cautiously by largely rolling over its production cuts into May and that Saudi Arabia will extend its additional cut until the end of June.
“We expect the alliance to start adding production in 500,000 bpd increments beginning in June and lasting through August,” the bank added.
(Reporting by Rania El Gamal and Ahmad Ghaddar; editing by Tom Hogue, Jason Neely and Barbara Lewis)