OECD oil stocks will continue growing in 2016, IEA says, oil slips

Commercial oil stocks in the world’s major economies will continue to grow in 2016, albeit much more slowly, the rich-world’s oil watchdog said in a closely watched report, adding to the selling pressure on oil futures.

New and spare storage capacity should be able to accommodate the projected extra 300m barrels of stocks in OECD countries, the International Energy Agency said in its Oil Market Report for November.

The IEA projected that the rate of growth in global demand for crude would slow to 1.2m barrels per day in 2016 from the 1.8 mb/d rise seen this year.

Annual growth of 1.8 mb/d in 2015 was led by China, the US, India and – somewhat surprisingly – Europe, the IEA said.

Furthermore, early indicators for the current quarter were that growth in demand will ease to 1.3 m/bd from a year earlier after reaching a peak last quarter at 2.2 mb/d, the IEA added.

Record production in Iraq and higher supplies from Kuwait sent OPEC’s output to 31.73 mb/d in November it said.

That was comfortably above the 31.3 mb/d which the IEA said the cartel of oil producing countries needed to provide – the “call on OPEC crude and stock change” – in 2016 in order to stabilise demand and supply.

However, the call on OPEC for next year was substantially higher, by about 1.6 mb/d, than that for 2015.

As of 10:13 front month Brent crude futures were 1.25% lower to $39.24 per barrel on the ICE.