The price of oil has plunged over the last two years as an enormous supply glut built up while growth in demand slowed.
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This has led the IEA to cut its 2016 demand growth forecast by 100,000 b/d to 1.3 million b/d.
IEA’s forecast followed a report on Monday by the Organisation of the Petroleum Exporting Countries which predicted that non-member countries would see output rise in 2017, revising its previous expectations of a drop.
All 10 S&P 500 sectors finished in the red, and every Dow Jones component fell except Apple, which gained 2.5% after carriers reported strong demand for its newest smartphones. The surplus will last longer than previously thought as demand growth slumps, the IEA said.
During Asian hours on Wednesday, crude futures rebounded after falling by as much as 3 percent in the previous session, as data from an industry group showed a smaller-than-expected build in USA crude stocks.
Part of the reason for excess oil flooding the market stems from the fact that Saudi Arabia and Iran have each raised their oil output by more than 1 million barrels per day since late 2014.
Gasoline inventories in the week to September 9, according to the EIA, were up by 600,000 barrels, after a 4.2-million-barrel decline in the previous week, still above what’s normal for this time of year, the EIA noted.
U.S. financial shares fell on weakened prospects of an interest rate hike in the near-term, adding to the negative tone in United States stocks, which ended more than 1 per cent lower.
“NOCs, who own the bulk of the world’s low-priced reserves, I would say their share will maintain if not become higher”, the IEA’s executive director, Fatih Birol, told Reuters in an interview.
However, the loss has been more than made up for by OPEC.
Libya’s National Oil Corporation is lifting force majeure at three ports and exports will resume immediately at two of them, it said on Thursday.
Oil prices took a pounding after a leading industry group reduced its global oil demand forecasts.
“It seems the situation has deteriorated strongly in the eyes of OPEC as well as the IEA”, Commerzbank head of commodities strategy Eugen Weinberg said. The biggest reason for the change is a more pronounced economic slowdown during the third quarter of the year. Higher output in OPEC countries almost completely offset the decline, the IEA says.
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Dealers said an informal output meeting of OPEC and Russian Federation in Algeria later this month, and further developments in Libya, will be key influences on prices.
