Oil prices eased on Tuesday, dragged lower by a broad decline across major financial markets and by a growing expectation that global demand will not grow quickly enough to erase the overhang of unwanted crude any time soon.
The world will store unwanted oil for most of 2016 as declines in U.S. output take time and OPEC is unlikely to cut a deal with other producers to reduce ballooning output, the International Energy Agency said.
The agency cut its forecast for 2016 oil demand growth, which now stands at 1.17 million barrels per day (bpd) following a five-year high of 1.6 million in 2015, and reduced its estimate of demand for OPEC crude.
Oil traders are even more bearish.
The world’s largest, Vitol, said it expects global oil demand to grow by around 1 million bpd this year, down from last year’s rate 1.6 million bpd.
“I don’t think we can rely on low prices driving much incremental demand at this point,” Vitol executive member Chris Bake said at an IP Week conference.
Brent crude futures were last down 26 cents at $32.62 a barrel by 1330 GMT, down from Monday’s session high of $34.68. U.S. futures were down 10 cents at $29.59.