Mubasher: The oil market could see a production surplus in the first quarter of this year turning into a modest deficit in the second quarter, the International Energy Agency (IEA) predicted on Friday.

The market could flip into a deficit in the second quarter by around 500,000 barrels per day (bpd), the IEA said in its monthly report.

The expected shift in supply is mainly ascribed to a resilient oil demand growth, fair declines in the output by the Organization of Petroleum Exporting Countries (OPEC) owing to disruptions from Iran and Venezuela and a surge in the US production, the energy watchdog added.

“This does not take into account Saudi Arabia’s announced plans to reduce its exports further in April,” the report said.

The production cuts led by OPEC raised a hefty spare capacity cushion.

“This is especially important now as economic sentiment is becoming more pessimistic and the global economy could be entering a vulnerable period,” the IEA added.

The durability of fixes to the power system, vital for crude production, in Venezuela remains unknown, as the Latin American nation saw the worst blackout on record.

However, in the event of a major loss of Venezuelan output, OPEC had around 2.8 million bpd of effective spare capacity, the agency said.

A surge in US production offered a relief to global markets, according to the IEA’s report.

“The relentless pace continues into 2019, when US supply is expected to expand by 1.5 million bpd and account for 83% of non-OPEC growth of 1.8 million bpd,” it said.

The IEA maintained its global oil demand growth forecast for this year at 1.4%, or 1.4 million bpd.

By 1:24 pm GMT, US Nymex crude futures fell 1.09% to $57.97 per barrel (pb), while global benchmark Brent futures dropped 1.26% to $66.38 pb.