A record glut of oil is set to continue into next year and maintain pressure on prices, the International Energy Agency said on Friday.
Stockpiles stand at a record three billion, the IEA said in its monthly report.
The report has added to falls on European stock markets, with the FTSE 100 shedding almost 1% on Friday.
Frankfurt and Paris also declined following sharp falls in Asian stock markets, with Hong Kong sliding 2.2%.
Investors also reacted to disappointing eurozone growth figures and a slump in commodity prices on the back of weaker demand from China.
Other factors affecting confidence include fears that the Federal Reserve will raise interest rates next month and poor corporate results from heavyweights including Rolls-Royce and E.On this week.
The FTSE 100 was down 52 points at 6,125 in lunchtime trading after closing down 1.9% on Thursday, while Frankfurt’s Dax fell 0.7% and the Cac in Paris shed 0.8%.
‘Primed for correction’
There were no risers on the French market, with aerospace and defence company Safran topping the fallers with a near 6% slide.
Craig Erlam, senior market analyst at Oanda trading group, said: “The market was primed for some form of correction following a good five weeks for investors.”