The latest in an always closely-watched monthly oil market report by the International Energy Agency (IEA) has dampened prospects of any significant increases in oil prices. Its June report has forecast a small surplus of oil stocks in early 2017.

The IEA said commercial inventories in the countries belonging to the Organization of Economic Co-Operation and Development (OECD) increased from March levels by 14.4 mb to stand at 3065 mb by end-April, which it called “an impressive 222 mb above one year earlier.” As the U.S. driving season kicks off, it said, OECD gasoline stocks “stand above average levels and last year in absolute and days of forward demand terms. There is a similar picture in China.”

Yesterday the OECD also released its report on the U.S. economy. “It is making one of the strongest comebacks in the OECD, but there are risks on the horizon,” it said in its latest Economic Survey of the United States.

“Seven years after the financial crisis, the U.S. economy has rebounded through robust monetary policy support and the well-timed expansion of fiscal policy. Output has surpassed its pre-crisis peak by 10 percent, robust private-sector employment gains have sharply reduced unemployment, and fiscal sustainability has been largely restored. But key reforms are necessary to sustain the recovery,” it warned.

“It’s a recovery, but it’s a stubborn recovery,” said OECD Secretary-General Angel Gurría during the survey’s launch in Washington, D.C. with Jason Furman, Chairman of the Council of Economic Advisors.

“In so many ways, the U.S. economy is a role model for other OECD countries, but by America’s own high standards the recovery has been mild and risks losing momentum. There is a clear need to rebalance the policy mix and implement mutually reinforcing policies that boost productivity, reduce inequality, and promote sustainable growth,” he added.

In talking about “sustainable growth”, the OECD’s survey identifies environmental sustainability as an overarching challenge.

The U.S. “performs relatively poorly compared to the rest of the OECD on CO2 emissions reductions despite the strengthening of fuel economy standards and significant use of policies and incentives for renewable energy and energy efficiency at the State level,” it says.

It notes that further measures in the United States to abate climate change “should include putting a price on carbon dioxide emissions.”

When it comes to U.S. oil production, a steady decline as well as a weaker U.S. dollar have contributed to the bolstered prices recorded by the IEA’s June report. Outages in OPEC and non-OPEC countries cut global oil supply by nearly 0.8 mb/d in May, it says. At 95.4 mb/d, output stood 590 kb/d below a year earlier - the first significant drop since early 2013.

Non-OPEC supply growth is expected to return in 2017 at a modest 0.2 mb/d, after declining by 0.9 mb/d in 2016, according to the IEA’s June Oil Market Report. 

“OPEC crude output fell by 110 kb/d in May to 32.61 mb/d as big losses in Nigeria due to oil sector sabotage more than offset higher Middle East output. Iran has clearly emerged as OPEC’s fastest source of supply growth this year, with an anticipated gain of 700 kb/d,” it says.

Now its prediction for global oil demand growth in the first quarter of 2016 has been revised upwards to 1.6 mb/d and for 2016 “growth will now be 1.3 mb/d” it says. “In 2017 we will see the same rate of growth and global demand will reach 97.4 mb/d” it adds.

But it is non-OECD nations that will provide most of the expected gains in both years, it suggests.

U.S. shale oil production is expected to slip by 500,000 b/d this year and a further 190,000 b/d in 2017, despite an expected return to growth by mid-2017, the IEA said. And it warned that if supply shut-ins alleviate and demand growth is not maintained, it may be more difficult to clear what it termed a still “enormous” inventory overhang.

“Canada’s shut-in production will fully return in the near future, but the troubles in Nigeria and Libya look to be longstanding … This current list of shut-ins might soon be augmented by Venezuela,” said the IEA.

Dina Medland is an independent writer, editor and commentator with a strong focus on issues around corporate governance, ethics, the workings of the boardroom and sustainable business. She is on the team of contributors to @ForbesEurope and is an ex-Financial Times staff member who has been a regular contributor in recent years. Further details about her background and a portfolio of work – including her commercially sponsored blog ‘Board Talk’ are available on her website http://www.dinamedland.com