Despite oil’s recent foray below $70 a barrel, market balances aren’t currently that bad. The problem is, this is as good as things get for quite some time.

In its monthly report Thursday, the International Energy Agency said stockpiles contracted in July and likely did so again last month.

The US Energy Information Administration paints a similar picture, showing inventories shrinking in each of the past four months and forecasting a 1.4 million-barrel-a-day decline in September.

Other supporting factors have been lost in the price plunge, including a slump in Libyan exports and a shutdown of production in the Gulf of Mexico as Hurricane Francine swept through.

Those disruptions go some way to explaining why the Brent benchmark has mustered a recovery back above $70 — but that’s where the good news ends.

Cast a glance ahead and balances — particularly the IEA’s — look bleak. The agency forecasts stock builds next year, with or without extra OPEC+ supplies.

Citigroup Inc. said Wednesday the producer group probably needs to cut an extra million barrels a day if it wants to balance the market in 2025.

And while much of the focus remains on demand — with slowing growth in China and concerns in the US — supply is really the issue.

Global oil output will hit a record this year, even with OPEC+ curbs in place. Production from outside the group is set to grow by 1.5 million barrels a day, and by the same amount again in 2025.

That deluge is why traders are so bearish right now, despite signs of tighter volumes in the near term.

“The focus is moving to the fourth quarter and to 2025,” IEA oil-market divisional head Toril Bosoni said in a Bloomberg Television interview. Next year, “we’re looking at a significant surplus.”

–Alex Longley, Bloomberg News