IEA cuts 2016 oil demand forecast, Brent futures drop
The world's thirst for oil was set to increase less then previously expected, the rich-world's energy watchdog said, given a more pronounced slowdown in the third quarter of 2016.
Global demand for oil would expand by 1.3m barrels a day in 2016, 100,000 barrels per day less than previously estimated, the International Energy Agency said in its latest Oil Market Report.
As of 1141 BST front month Brent crude oil futures were falling 2.24% to $47.26 on the ICE.
In 2017 the rate of growth in demand would slow further, to 1.2m b/d, teh IEA said, "as underlying macroeconomic conditions remain uncertain".
On the other side of the equation, supplies worldwide declined by 300,000 b/d in August, as a result of lower production from non-OPEC member countries, although increased near-record output from within the cartel nearly offset that drop.
At 96.9m b/d, global production of crude oil was left standing 300,000 barrels below year-ago levels.
Total global consumption would reach 96.78m b/d in 2017, the US Department of Energy estimated on 7 September.
Non-OPEC supplies were seen returning to growth in 2017, rising by 380,000 barrels per day, the IEA said, albeit after a "steep" 840,000 b/d drop in 2016.
"Refinery runs in 2016 are set to grow at the lowest rate in a decade," the Paris-based organisation said.
"As refinery activities reached a summer peak, crude oil inventories refused to decline until an exceptional storm-related draw hit the US in late August," the IEA added.
However, peak summer demand was expected to result in the first quarterly crude stock draw in more than two years.
Total OECD inventories increased by 32.5m barrels in July, hitting a fresh record of 3,111 mb.
"Our commodity strategists estimate that most of the sell-off in oil prices is behind us, as they look for WTI oil prices to rallyto $54/bbl (+17%) by the end of the year and $69/bbl (+49%) by next June.
"Oil production continues to fall, as global oil & gas investment has been cut by nearly $300bn (41%) and rig counts have dropped by 37% since the 2014 peak. In contrast, low oil prices continue to drive healthy demand growth, putting the oil market on pace to see its biggest supply-demand deficit since 2011. Our commodities team estimates that the deficit will last through 2020," analysts at BofA-Merrill Lynch said in a research report published on 13 September.