Oil prices have declined following a report by the Paris-based International Energy Agency (IEA) stating that market rebalancing may be delayed due to weak compliance with regard to output cuts among members of the Organization of the Petroleum Exporting Countries (OPEC).
Brent crude slipped 34¢ to $47.40 a barrel, while the US light crude fell 32¢ to $45.17, Reuters reported.
However, watchdog also highlighted a stronger outlook for global oil demand in its monthly report, as consumption of the product has risen in Germany and the US in recent months.
The IEA report stated: "Each month something seems to come along to raise doubts about the pace of the rebalancing process.
"This month, there are two hitches: a dramatic recovery in oil production from Libya and Nigeria, and a lower rate of compliance by OPEC with its own output agreement."
IEA’s report further noted that crude inventories remain high worldwide following a modest fall among industrialised nations in May.
The oil cartel stated that due to additional production from Nigeria and Libya, its production for last month increased by 393,000 barrels per day to 32.611 million barrels per day.
The increase came despite its pledge to cut output by about 1.2 million barrels per day between January and next March.
Image: IEA highlighted a stronger outlook for global oil demand in its monthly report. Photo: courtesy of SMelindo / Flickr.
