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Slowdown in oil demand growth will put lid on prices, says energy agency Slowdown in oil demand growth will cap prices, says energy agency
(35 minutes later)
A sharp slowdown in global oil demand growth will put a lid on prices, according to the International Energy Agency, which said ballooning oil stocks and rising supply would also mean the crude market is likely to be oversupplied through the first six months of 2017.A sharp slowdown in global oil demand growth will put a lid on prices, according to the International Energy Agency, which said ballooning oil stocks and rising supply would also mean the crude market is likely to be oversupplied through the first six months of 2017.
The IEA report published on Tuesday tallied with a gloomy forecast by the Opec oil cartel about the prospects for demand over the next year, sending oil prices down to $47 (£35) a barrel.The IEA report published on Tuesday tallied with a gloomy forecast by the Opec oil cartel about the prospects for demand over the next year, sending oil prices down to $47 (£35) a barrel.
The IEA said global oil demand growth had slackened by more than previously thought following a slowdown in global trade that offset higher demand in China.The IEA said global oil demand growth had slackened by more than previously thought following a slowdown in global trade that offset higher demand in China.
Without a strong rise in oil prices, major importers such as Britain, Japan and most of Europe, are likely to see only muted pressure on petrol prices. Without a strong rise in oil prices, major importers such as Britain, Japan and most of Europe are likely to see only muted pressure on petrol prices.
In its September oil market report, the organisation said it anticipated global demand growth to rise by 1.3m barrels a day in 2016, 100,000 below the previous forecast.In its September oil market report, the organisation said it anticipated global demand growth to rise by 1.3m barrels a day in 2016, 100,000 below the previous forecast.
The IEA anticipates a further slowdown next year, down to 1.2m barrels a day “as underlying macroeconomic conditions remain uncertain”.The IEA anticipates a further slowdown next year, down to 1.2m barrels a day “as underlying macroeconomic conditions remain uncertain”.
The Paris-based organisation also said world oil supplies remained near record levels despite a 300,000-barrels-a-day drop in August. The fall was largely the result of lower output from countries outside the Opec oil cartel and was offset by production from Opec countries, which include Saudi Arabia, Nigeria and Venezuela.The Paris-based organisation also said world oil supplies remained near record levels despite a 300,000-barrels-a-day drop in August. The fall was largely the result of lower output from countries outside the Opec oil cartel and was offset by production from Opec countries, which include Saudi Arabia, Nigeria and Venezuela.
The weak outlook contrasts with the agency’s last forecast a month ago for supply and demand to be broadly in balance over the rest of this year and for stocks of oil to fall swiftly.The weak outlook contrasts with the agency’s last forecast a month ago for supply and demand to be broadly in balance over the rest of this year and for stocks of oil to fall swiftly.
The IEA’s latest comments followed a bearish outlook from Opec the day before.The IEA’s latest comments followed a bearish outlook from Opec the day before.
Brent crude prices fell to $47.40 a barrel, while US West Texas Intermediate futures declined by $1.03 to $45.26 a barrel.Brent crude prices fell to $47.40 a barrel, while US West Texas Intermediate futures declined by $1.03 to $45.26 a barrel.
“It seems the situation has deteriorated strongly in the eyes of Opec as well as the IEA,” Commerzbank head of commodities strategy Eugen Weinberg told Reuters. “It seems the situation has deteriorated strongly in the eyes of Opec as well as the IEA,” Commerzbank head of commodities strategy Eugen Weinberg told Reuters. “I wouldn’t be surprised to see this price weakness continue for a while right now, because that was not on the cards, in our opinion.”
“I wouldn’t be surprised to see this price weakness continue for a while right now, because that was not on the cards, in our opinion.”
Upbeat Chinese data on industrial output growth for August failed to lift oil prices as the crude market remained in a profit-taking mode, traders said.Upbeat Chinese data on industrial output growth for August failed to lift oil prices as the crude market remained in a profit-taking mode, traders said.
China’s industrial output grew the fastest in five months as demand for products from coal to cars rebounded thanks to higher government spending and a year-long credit and property boom.China’s industrial output grew the fastest in five months as demand for products from coal to cars rebounded thanks to higher government spending and a year-long credit and property boom.