By David Hodari

LONDON--The International Energy Agency raised its 2020 oil production growth estimate for countries outside the Organization of the Petroleum Exporting Countries on Friday, with the U.S. set to continue as the key driver of growth.

In its closely-watched oil-market report, the IEA said it expects non-OPEC oil supply growth to rise to 2.3 million barrels a day next year, up from 2.2 million barrels a day in its previous estimate.

The agency said heavy oil market inventories and strong market supply would continue next year and that "the U.S. will lead the way but there will also be significant growth from Brazil, Norway and barrels from a new producer, Guyana."

That change to the IEA's supply estimate came after the agency said earlier this week in its annual World Energy Outlook that U.S. shale-oil production will reshape global energy markets in the years to come, boosting the country's influence over OPEC nations.

The IEA's note also followed OPEC's monthly market report, released Thursday, in which the cartel raised its own non-OPEC production growth estimate. OPEC and its allies are due to meet in Vienna in December to discuss the status of ongoing supply cuts, and OPEC leaders have been circumspect about whether they may deepen or extend cuts, citing slowing U.S. production growth as a factor.

While U.S. growth is expected to slow in 2020--its contribution to non-OPEC growth slipping to 54% from 87% this year--that will be partly mitigated by stronger growth from other countries, the IEA said in its monthly report.

Both the IEA and OPEC have cited shale oil production in the U.S., as well as torpid global growth and the effects of the ongoing trade war between the U.S. and China as factors behind an increasingly bearish oil market outlook.

The agency held its global economic growth estimates and its oil demand growth estimates for 2019 and 2020 in the report, a rarity in recent months after downgrading its 2019 demand forecast four times in six months prior to November.

Still, "the health of the global economy remains uncertain in spite of recent positive news about the U.S.-China trade dispute," the report said.

A lack of change to demand estimates came partly thanks to global oil demand rising at its fastest pace in a year in the third quarter of 2019, with China, Russia, and Saudi Arabia the key drivers.

Higher Saudi supply also helped OPEC output bounce from a 10-year low in October, with Riyadh swiftly restoring supply after attacks on Saudi processing facilities at Abqaiq and Khurais temporarily downed 5% of global supply.

Ecuador and Iraq--both suffering wide-scale protests--posted OPEC's biggest output declines, echoing Thursday's OPEC report.

While the outlook for OPEC nations didn't decline any further in the IEA's November report, "the hefty supply cushion that is likely to build up during the first half of next year will offer cold comfort to OPEC+ ministers gathering in Vienna at the start of next month," the agency said.

Brent crude oil was up 0.3% at $62.46 a barrel and WTI futures were up 0.3% at $56.96 a barrel in early trading Friday, having closed Thursday little changed after U.S. Energy Information Administration data contradicted American Petroleum Institute data of the previous day to show a build in U.S. crude inventories.

Write to David Hodari at david.hodari@wsj.com

(END) Dow Jones Newswires

November 15, 2019 04:14 ET (09:14 GMT)

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