IEA forecasts lower oil demand for next year

After riding on the OPEC meeting optimism on Monday, global oil benchmarks have been hit by inventory reports that showed big rise in the stocks. American Petroleum Institute’s (API) report showed more than 2 million barrels of increase in oil stocks, while Energy Information Administration (EIA) reported more than a million gains. OPEC report has also taken its toll that showed record oil production of 10.67 million barrels by Saudi Arabia.

The latest blow to the benchmarks came from International Energy Agency (IEA). In its monthly oil market report, the agency reported lesser than expected demand for Crude oil in next year. It expects the demand growth to a slowdown from 1.4 million barrels per day this year to 1.2 million barrels/day in 2017.

On the supply side, according to the report, there was an increase by 800,000 barrels per day in July. The output from the OPEC, increased by 150,000 barrels per day to 33.4 million barrels/day. Production increased from Saudi Arabia, Iraq, and Iran, which was offset by countries like Nigeria, Libya, and Venezuela. Non-OPEC supply rose by almost 550,000 barrels per day in July, largely driven by production recovery in Canada, which had been disrupted by a wildfire earlier in the year. IEA forecasted a drop of 900,000 barrels/day production outside OPEC, led by the United States.

The agency also notes that the supply overhang focus now shifted from raw to refined products. Commercial stocks have increased by 5.7 million barrels to a record of 3.09 billion barrels.

WTI is currently trading at $41.5 per barrel and Brent at $2.4 per barrel premium.