World oil prices slumped on Tuesday as the International Energy Agency warned that a global supply glut would last six months longer than thought.
Prior to Tuesday’s revised forecast from the IEA watchdog, prices were already falling after OPEC sparked its own fresh worries about the oversupply crisis.
Around 10.15 GMT, US benchmark West Texas Intermediate for delivery in October was down USD 1.12 at USD 45.17 a barrel.
Brent North Sea crude for November delivery shed $1.0 to $47.32 a barrel compared with the close on Monday.
“Oil remains under pressure again today after the IEA reported that oil demand growth will be lower than expected this year,” said Craig Erlam, senior market analyst at Oanda trading group.
“This at a time when OPEC is pumping at near-record levels and non-OPEC countries are expected to pump at a faster rate than previously expected in 2017.”
The IEA said oil demand growth was slowing while supply was rising, meaning the glut was now due to linger “at least through the first half of next year”.
The Paris-based organisation had earlier seen the oil oversupply disappearing in the latter part of 2016.
Oil prices were falling back once more after the commodity rallied for most of August on hopes of a deal at an upcoming meeting between OPEC and Russia to limit output.
But the market has taken a beating in recent weeks as traders grow cynical that the Algiers gathering later this month will end in an agreement.
Adding to the downward pressure has been a pick-up in the dollar — making oil more expensive for holders of other currencies — and signs that demand remains weak.
The Organization of the Petroleum Exporting Countries (OPEC) yesterday said non-OPEC producers, such as Russia, would see output rise in 2017, revising its previous expectations of a drop.
“Oil prices are under pressure on renewed oversupply concerns,” Bernard Aw, an analyst with IG Markets in Singapore, told AFP.
Forecasts that US commercial crude stockpiles will show a rise when fresh data is released Wednesday would give “credence to OPEC’s prediction that output from non-OPEC producers will increase next year”, Aw added.
Traders are keeping watch also on the Federal Reserve ahead of a policy meeting next week, with speculation rife that it could lift US interest rates.
Such a move would strengthen the dollar, hurting crude prices even further.