Global oil demand is now expected to grow by 1.3 million barrels per day (mb/d) in 2016, to 96.1 mb/d, from its original forecast of 1.4 mb/d growth.
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Futures fell 3 per cent in NY.
“Recent pillars of demand growth – China and India – are wobbling”, said the IEA, which counsels 29 nations on energy policy.
The nation’s major oil companies were the day’s biggest decliners following a pair of bearish demand reports and ahead of a report on USA stockpiles.
“Producers and service companies. are well positioned to return to growth mode at much lower prices”, Barclays said. “Also, there are expectations that United States inventories will post a big build as all the imports that were delayed arrive”.
USA stockpiles fell the most in 17 years the previous week, surprising the market, although analysts said the decline was because of the suspension of imports and shutdown of some production owing to a severe hurricane in the Gulf of Mexico and not due to robust demand.
US crude fell $1.26, or 2.7 percent, to $45.03 a barrel in NY. Total volume traded was 28 per cent above the 100-day average.
The S&P 500 energy index was down 2.9 percent, leading sector declines, while the S&P financial index fell 1.8 percent.
Analysts expect US government data on Wednesday to show a stockpile build of 4.5 million barrels in crude last week. WTI traded at US$45.20 at 4:39pm in NY. Brent crude, the global standard, fell $1.22, or 2.5 percent, to $47.10 a barrel in London. The global benchmark was at a $1.60 premium to West Texas Intermediate for November.
Declines accelerated as U.S. equities dropped and the dollar climbed while investors remained on edge over the central banks’ ability to bolster growth.
“Our forecast in this month’s report suggests that this supply-demand dynamic may not change significantly in the coming months”. The US dollar rose 0.5% against a basket of currencies, reaching the highest level in more than a week.
“Another nail in the coffin overnight, as both OPEC and the International Energy Agency revised their oil demand figures for 2017 down”, said Jeffrey Halley, senior market analyst at OANDA trading. Their prediction earlier in the year that the oil market would be in equilibrium by the end of 2016 was pushed out to June 2017, due to slower projected demand growth.
“The focus of the market is squarely on supply”, said Evan Lucas, a market strategist at IG Ltd.in Melbourne. The cartel noted a decline in production, but lowered demand expectations.
Angola saw its oil output rise to 1.775 million bpd in August from 1.767 million bpd the previous month, based on direct communication, according to the OPEC report.
“It is expected that there will be higher non-OPEC production in the second half of 2016 compared to the first half”, OPEC said in the report.
Oil prices shot up to more than $100 a barrel in mid-2014 before a long slide sent them crashing below $30 at the start of the year.
Libya’s plans to restore oil production suffered a significant setback after forces loyal to the eastern region’s powerful military commander ousted government-backed fighters from key export terminals, just days before a tanker was due to load the first shipment in nearly two years.
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Anadarko Petroleum Corp agreed to buy Gulf of Mexico oil assets from Freeport-McMoRan Inc for US$2 billion and said it will use revenue generated by the offshore wells to develop its U.S. oil fields on land. Banks and phone companies are also falling.
