Brent crude, the worldwide benchmark, was hovering around $44 a barrel on Thursday in London.
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The agency trimmed forecasts for world oil demand growth in 2017 by 100,000 barrels a day because of a “dimmer macroeconomic outlook”, projecting that consumption will expand by 1.2 million barrels a day to average 97.5 million a day.
The IEA said an oil-price rally that began in June and reached $52 a barrel was halted by a huge buildup of oil kept in storage and a new glut of refined fuel products like gasoline that have cooled down demand for crude from refineries.
US West Texas Intermediate (WTI) crude futures were trading at $41.59 per barrel at 0650 GMT, down 12 cents from their last settlement. The fundamentals are bearish for oil and gasoline prices, and not likely to change any time soon. USA crude CLc1 rose 38 cents to $42.09.
SINGAPORE – Oil prices fell early on Thursday as a build in U.S. crude inventories and record Saudi Arabian production weighed on markets. Analysts polled by Reuters had expected a 1.0 million barrel crude draw.
Production by the Organization of the Petroleum Exporting Countries has been boosted by producers such as Saudi Arabia, Iraq and Iran.
“Once we saw inventories this morning, that certainly moved energy far lower and dragged nearly everything else down”, said Tim Dreiling, regional investment director for The Private Client Reserve of US Bank. As a result, the price difference is expected at $2.35 a barrel not in favor of the European economy and the rest world. “Crude oil – still the largest part of the global oil market – has its own fundamentals that are not necessarily in sync with the total liquids market”, IEA analysts wrote in their report.
“Oil prices have been through a turbulent period since United Kingdom voters opted to leave the EU”. The report from the EIA on July 29 showed crude oil inventories at 522.5 million barrels, “historically high levels for this time of year”.
Helima Croft, global head of commodity strategy for RBC Capital Markets, astutely provided the big picture to CNBC by pointing out, “If you’re in Venezuela, you’re basically in a bus driven by Saudi Arabia, so they’re doing everything they can to get the powerful gulf producers to basically hold an emergency meeting”. Saudi Arabia was a supporter of a production freeze when the proposal was first floated in April.
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Earlier this month, the state oil company Saudi Aramco revealed that it would cut export prices for customers in Asia.
