A global oil glut that has hurt producers but means cheaper pump prices look set to go on at least six months longer than previously thought sending world oil prices slumping.
The International Energy Agency said 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.
The timing of the world oil market’s return to balance is “the big question”, the IEA said in its monthly report, adding that current prices — above $45 — would suggest supply falling and strong demand growth.
“However, the opposite now seems to be happening,” it said. “Demand growth is slowing and supply is rising.”
The trend may fuel speculation of a possible production freeze — aimed at supporting prices — being agreed between OPEC and non-OPEC member Russia at a meeting in Algeria later this month.
China and India, which had been key drivers recently of demand growth, are “wobbling”, it said, while a slowdown in the United States and economic concerns in developing countries have also contributed to the surprise development.
Global oil demand is now expected to grow by 1.3 million barrels per day (mb/d) in 2016, to 96.1 mb/d, from its original forecast of 1.4 mb/d growth.
The IEA also trimmed its demand growth forecast for 2017 by 200,000 barrels per day, to 97.3 mb/d.