In its monthly Oil Market Report for July released Thursday morning, the International Energy Agency (IEA) said that global crude supplies rose by a whopping 720,000 barrels per day in June, due to increases from both OPEC and non-OPEC producers. Total output was 97.46 million barrels a day, up by 770,000 barrels a day.

Commercial inventories in May in OECD countries totaled 3.047 billion barrels, up by 6 million barrels from the April total. OECD stockpiles are now 266 million barrels above the five-year average, down by 34 million barrels from the prior month’s total. The IEA said that preliminary indications show a “moderate reduction” in June stockpiles.

Second-quarter demand growth estimates rose from 1.0 million barrels a day in the first quarter to 1.5 million barrels a day. For all of 2017, total demand is now forecast at 98 million barrels a day, up by 1.4 million barrels a day compared to 2016. For 2018, total demand is forecast to hit 100 million barrels a day in the third quarter and average 99.4 million barrels a day for the full year.

OPEC crude oil production rose by 340,000 barrels a day to 39.48 million barrels in June. Nigerian output rose by 60,000 barrels a day month over month and Libyan output rose by 80,000 barrels a day. Saudi Arabian production rose from 9.92 million barrels a day to 10.05 million barrels a day. OPEC compliance with state production cuts fell to 78%, the lowest since the cuts were initiated in January. The cartel and its partners achieved 95% compliance in May.

Increased production from Nigeria and Libya, combined with faltering compliance with the agreed-upon production cuts, are raising serious questions about whether the market can achieve balance this year. The IEA commented on the futures market:

Oil investors are going through a period of waning confidence with prices recently returning to levels not seen since early November. Brent prices have closed below $50 [a barrel] each day since early June and few investors expect a recovery anytime soon. Money managers slashed net long positions in Brent and WTI crude futures by more than 200 [million barrels] between end-May and end-June, to 312 [million barrels]. This was the lowest net long position recorded since January 2016 and June was the fourth straight month of falls in net long positions since a record bullish position was achieved in February in the euphoria following the output agreements. The widespread interpretation of this is that investors believe, perhaps impatiently, that oil market re-balancing is taking too long with some calling for additional action by producers to speed up the process.

In its own monthly report on oil markets, OPEC on Wednesday said that the cartel’s production rose by nearly 400,000 barrels a day in June. The U.S. Energy Information Administration (EIA) also reported that U.S. production rose last month. Even though demand continues to rise, production increases are working against the market rebalancing that OPEC and the IEA and the EIA all anticipated.

Early Thursday morning, WTI crude for August delivery traded at $45.75 a barrel, up about 0.6% compared with Wednesday’s closing price. Brent crude for September delivery traded up about 0.4% at $47.94 a barrel in London.

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