Oil prices continued to remain low on Tuesday due to expectations of falling demand.
That followed another round of poor economic data from the eurozone, with services and manufacturing output contracting in May.
At the same time the International Energy Agency warned that the cost of crude – though well off its peak in March of more than $128 a barrel – is still high enough to be a threat to the global economy.
The IEA’s executive director Maria van der Hoeven complained the price is still not low enough to stimulate growth.
Even though Brent crude on Monday dropped to a 16-month low below $96 a barrel before recovering to around $99, van der Hoeven said: “Let’s be honest, we still confront a situation of near triple digit oil prices.”
She told reporters: “This is placing a huge burden on budgets and that’s contributing to the risk of further economic slowdown.”
Increased supply from OPEC producers had helped ease the price and the fall was important, but producers and consumers could not yet claim victory in taming the oil price, van der Hoeven said.
“I do hope the price will come down. The market is well supplied, producers are supplying more than demand,” she added.
Shelling out less
Also striking a bearish note for investors, Royal Dutch Shell CEO Peter Voser said oil prices were likely to keep falling well into the second half of the year due to a slowing global economy and easing geopolitical uncertainty.
“Global demand is softening, we have got recessionary elements in Europe, a small slowdown in Asia Pacific,” Royal Dutch Shell CEO Peter Voser told Reuters on the sidelines of an industry conference on Tuesday.
“At the same time, some of the geopolitical elements of price volatility over the past few months have kind of receded, and therefore we see a softening of prices which I expect to go well into the second half of this year.”