The price of oil has fallen in recent weeks, and the global benchmark, Brent, was flat at $44.05 on Thursday.
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Data showing Saudi Arabia pumping oil at record high volumes in July added to worries about a global crude glut.
Oil fell sharply after data from the U.S. Energy Information Administration (EIA/S) showed crude inventories rose 1.1 million barrels in the week ended August 5.
Meanwhile, global demand growth is expected to decline from 1.4 million bpd in 2016 to 1.2 million bpd in 2017, the IEA said.
In the USA, domestic inventories of crude oil and petroleum products rose last week to a record high, government data showed Wednesday. The draw, amid U.S. East Coast refinery runs hitting 2011 lows, exceeded expectations for a gasoline drawdown of 1.1 million barrels.
That added to losses overnight, triggered by news of continuous growth in US crude stocks and record-high output by Saudi Arabia – both signs that the world is still very much oversupplied with oil.
Oil prices have been fluctuating since entering a “bear” market last week, falling more than 20 percent and closing below US$40 a barrel for the first time since April.
On the New York Mercantile Exchange, light, sweet crude futures for delivery in September traded at $41.35 a barrel, down 36 cents, or 0.8%.
“The resulting product stock draw will increase refiners’ appetite for crude oil and help pave the way to a sustained tightening of the crude oil balance”, the IEA added.
WTI had its sharpest monthly fall in a year in July, dropping 14%, after runaway gasoline demand for the summer still fell short of refiner production. Storage tanks worldwide are also almost full with oil products while refiner profits in Singapore have hit two-year lows.
The EIA added to the bearish supply-demand picture on Tuesday with a forecast that showed it had scaled back estimates for U.S. crude oil output declines in 2016.
“Some momentum will be lost in 2017 due to downgrades in economic growth projections, but the forecast expansion of 1.2 million b/d is still above-trend”, the Paris-based energy watchdog said in the report (http://www.marketwatch.com/story/iea-massive-stock-overhang-is-capping-oil-price-2016-08-11).
The upward trend also suggests that major cartel members are making maintaining market shares their priority and holding on to the tactic that lower oil prices will drive away non-OPEC high-cost producers, such as the USA frackers.
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The EIA said gasoline stocks fell 2.8 million barrels last week in the second-biggest weekly draw for the fuel since mid-April.
