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Glut alert! Oil demand slowing, production still high

Oil prices were down again on Tuesday following pessimistic predictions about the growth in demand from the International Energy Agency.

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Glut alert! Oil demand slowing, production still high

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Oil prices were down again on Tuesday following pessimistic predictions about the growth in demand.

The International Energy Agency (IEA) said global oversupply will continue at least through the first half of next year, longer than it had previously predicted. That followed similar sentiment from the Organization of the Petroleum Exporting Countries (OPEC).

Just a month ago the IEA had forecast supply and demand would be broadly in balance for the rest of this year and said it expected inventories to fall swiftly.

But in its latest monthly report the agency said consumption growth has dipped to its lowest in two years, with China and India buying less crude.

The IEA said at the same time OPEC’s members in the Gulf continue to pump at record levels even as production has declined in other parts of the world.

On Monday OPEC also predicted a larger surplus next year due to new fields in non-member countries and as US shale drillers prove more resilient than expected, not cutting back production hugely despite the price of crude falling amid the glut.

The forecasts could put pressure on producers at a meeting later this month in Algeria when possible curbs on output will be discussed.