The International Energy Agency (IEA) said on Friday that oil markets appeared to have "sufficient supplies now" after a significant increase in production over the past six months, but noted that the oil sector was under pressure as it tried to cope with rising global demand.
In its monthly report, the IAEA said reserve capacity in the global oil sector had already fallen to just 2 percent of global demand and was likely to fall further.
"This pressure on the oil sector may continue with us for some time and will probably be accompanied by a rise in prices, which we regret most because of its potential negative impact on the global economy," the Paris-based agency said.
Members of the Organization of the Petroleum Exporting Countries (OPEC) and other exporters such as Russia and oil producers in the United States have increased their production of crude heavily since May, which led to production to rise 1.4 million barrels per day.
In general, OPEC has increased production by 735,000 bpd since May, with producers from the Gulf region, such as Saudi Arabia and the United Arab Emirates, compensating for a fall in output from Venezuela and Iran, which faces US sanctions next month.
This comes as expectations for global consumption of oil fell.
The agency cut its forecast for global oil demand growth to 0.11 million bpd for the current and next year to 1.28 million bpd in 2018 and 1.36 million bpd in 2019.
"This is because of weak global economic prospects, trade concerns, rising oil prices and an adjustment in Chinese data," said the agency, which advises crude consumers on energy policies.
The Organization for Economic Co-operation and Development (OECD) stockpiles rose 15.7 million barrels in August to 2.854 billion barrels, the highest level since February.
It also noted that OECD stockpiles are likely to have risen by 43 million barrels in the third quarter, the biggest quarterly increase in inventories since the first quarter of 2016.
"The increase in net supplies from two major producers since May at about 1.4 million bpd led by Saudi Arabia, the fact that oil stocks increased 0.5 million barrels in the second quarter of 2018 and seems to have done the same in the third quarter, Oil has enough supplies to date. "