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Crude Oil Prices Fall as IEA Report Hints Glut to Continue

Crude Oil Prices Fall as IEA Report Hints Glut to Continue

Varun Jaitly, Contributor


Talking Points:

  • Crude oil prices fell after IEA report argued supply glut will continue
  • Global supply fell to 0.3 mb/d in August despite record OPEC output
  • IEA expects non-OPEC output will rise while demand slows next year

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Crude oil prices fell 2.7 percent today following the release of the International Energy Agency’s monthly market report. The IEA downgraded their 2016 demand outlook, forecasting a gain of 1.3 mb/d versus 1.4 mb/d previously, noting that uptake is slowing at a “faster pace than initially predicted”. The agency cited a “more pronounced slowdown” in the third quarter of 2016 as driver of a further demand decrease.

Global oil supply decreased by 0.3 mb/d in August even as OPEC production increased again. OPEC’s near-record output continues to counter-balance sharp declines among non-member producers. The IEA expects non-OPEC supply will return to growth in 2017, following an 840 kb/d decrease this year. Total inventories increased to a record 3111mb in July but saw a sharp decline in August following the largest supply draw from the US in 15 years, which was broadly attributed to weather conditions.

DailyFX provides forex news and technical analysis on the trends that influence the global currency markets.