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Oil demand to slow in 2017, IEA says

Prices of oil retreated slightly after reports of a new OPEC meeting sparked a rally.

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OIL: Crude oil prices were moving higher after the International Energy Agency said it expects that supply and demand for oil will be more in balance the rest of this year.

Oil prices fell Wednesday after an unseasonal growth in crude stockpiles overshadowed the second-biggest weekly draw in USA gasoline this summer.

The Paris-based think tank lowered its forecast for oil demand growth for next year, saying the rebound in oil prices from their depths at the start of the year had slowed the market’s momentum. US stockpiles of crude oil and refined products rose by 2.5 million barrels in the week ended August 5 to 1.39 billion barrels.

In emailed remarks on EIA data, Anthony Starkey, a market analyst for S&P Global Platts, said there are signs of market conditions improving, but headwinds remain. USA oil prices also rose, increasing 1.82% to $42.47 on Thursday morning.

The IEA said global oil supply rose by about 800,000 bpd in July as both production from members and non-members of the Organization of the Petroleum Exporting Countries (OPEC) increased. For 2017, global oil demand is expected to grow at the same level anticipated last month; that is, going up by 1.15 mb/d from 2016 levels.

The expert noted that unless the big producers, particularly Iran and Saudi Arabia, reach a compromise and support a proposal on production freezing, this latest effort will be no more successful than previous attempts made earlier in the year.

In its previous report in July, OPEC said it expected the oil market balancing later this year, leaving its forecasts largely unchanged.

International Brent crude futures were at $43.72 a barrel, down 33c, or 0.8%.

Distillate fuel inventories fell by 2 million barrels but are still near the upper limit of the average range for this time of year, according to the EIA. OPEC report has also taken its toll that showed record oil production of 10.67 million barrels by Saudi Arabia.

It said that this could ultimately be supportive of the oil price.

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The forecast for slower growth comes as the oil market is still oversupplied, with the IEA noting that “the massive overhang of [oil] stocks is also keeping a lid on prices”.

International Energy Agency concerned as oil supplies exceed demand