IEA Report Points to Higher Output and Lower Demand for Oil

Global oil prices have fallen further after the International Energy Agency (IEA) reported higher output and cut its forecast for demand growth.

Brent crude fell $2.72 to $86.17 a barrel before seeing a slight recovery, while US crude dropped $1.75 to $83.99.

The price of Brent has fallen by 20% since the summer on concerns of oversupply, as output increases and demand wanes.

“Recent price drops appear both supply and demand driven,” the IEA said.

“Further oil price drops would likely be needed for supply to take a hit – or for demand growth to get a lift.”

So far, the Organisation of Petroleum Exporting Countries (Opec), which produces about 40% of the world’s crude oil, has shown no signs of reducing supply.

In its monthly oil market report, the IEA said Opec production hit a 13-month high in September.

It also forecast that global oil demand would rise by about 700,000 barrels a day on average this year, 200,000 barrels a day lower than its previous forecast.

“Crude oil is being sold again following the monthly report from the IEA in which they saw oil demand growth this year rising at the slowest pace since 2009,” said Saxo Bank analyst Ole Hansen.

via BBC

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Alfonso Esparza

Alfonso Esparza

Senior Currency Analyst at Market Pulse
Alfonso Esparza specializes in macro forex strategies for North American and major currency pairs. Upon joining OANDA in 2007, Alfonso Esparza established the MarketPulseFX blog and he has since written extensively about central banks and global economic and political trends. Alfonso has also worked as a professional currency trader focused on North America and emerging markets. He has been published by The MarketWatch, Reuters, the Wall Street Journal and The Globe and Mail, and he also appears regularly as a guest commentator on networks including Bloomberg and BNN. He holds a finance degree from the Monterrey Institute of Technology and Higher Education (ITESM) and an MBA with a specialization on financial engineering and marketing from the University of Toronto.
Alfonso Esparza