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Oil price recovery will be short-lived, says IEA | Oil price recovery will be short-lived, says IEA |
(about 1 hour later) | |
A recent rise in oil prices is a "false dawn" and the oversupply of crude is set to worsen, according to the International Energy Agency (IEA). | A recent rise in oil prices is a "false dawn" and the oversupply of crude is set to worsen, according to the International Energy Agency (IEA). |
The IEA said in a report that a surplus of supply compared to demand in early 2016 was greater than it predicted. | The IEA said in a report that a surplus of supply compared to demand in early 2016 was greater than it predicted. |
It now expects oil stocks to grow by two million barrels a day in the first quarter and 1.5 million barrels a day in the following three months. | It now expects oil stocks to grow by two million barrels a day in the first quarter and 1.5 million barrels a day in the following three months. |
Demand growth will fall to 1.2 million barrels a day this year, the IEA said. | |
In January, Brent crude touched a 13 year-low of $27.67, but has since recovered to $33.23. However, prices are far below the post-financial crisis peak of $112 a barrel, reached in June 2014. | In January, Brent crude touched a 13 year-low of $27.67, but has since recovered to $33.23. However, prices are far below the post-financial crisis peak of $112 a barrel, reached in June 2014. |
Demand growth is expected to slow from the 1.6 million barrels a day seen in 2015, "pulled down by notable slowdowns in Europe, China and the US". | |
The IEA forecast that stock building could continue in the second half of 2016 at a rate of 300 million barrels a day in demand growth. It said: "If these numbers prove to be accurate, and with the market already awash in oil, it is very hard to see how oil prices can rise significantly in the short term." | |
The think tank questioned whether the recent rise in prices was a "false dawn" and concluded that a number of conditions increased the risk of weak oil prices. | The think tank questioned whether the recent rise in prices was a "false dawn" and concluded that a number of conditions increased the risk of weak oil prices. |
These included doubts that Opec, the oil cartel, was in talks with other oil producing nations to reduce supply. | These included doubts that Opec, the oil cartel, was in talks with other oil producing nations to reduce supply. |
It also quashed speculation that Opec nations would cut output this year, stating that output from Iraq reached a new record in January. Iran has increased production ahead of sanctions being removed and preliminary data suggested that Saudi Arabia's shipments had increased. | It also quashed speculation that Opec nations would cut output this year, stating that output from Iraq reached a new record in January. Iran has increased production ahead of sanctions being removed and preliminary data suggested that Saudi Arabia's shipments had increased. |