Oil demand growth to slow next year
The world’s demand for oil is expected to slow in 2016 in response to a more pessimistic outlook for the global economy, likely keeping the crude market oversupplied, the International Energy Agency (IEA) said.
“Global demand growth is expected to slow from its five-year high of 1.8 million barrels per day in 2015, to 1.2m bpd in 2016,” moving closer toward its long-term trend, the IEA said in its monthly oil market report.
That will probably mean a continued oil supply glut next year, especially with the expected arrival of Iranian crude.
“A projected marked slowdown in demand growth next year and the anticipated arrival of additional Iranian barrels — should international sanctions be eased — are likely to keep the market oversupplied through 2016,” it said.
Citing the International Monetary Fund’s recent downward revisions on global growth estimates by onefifth of a percentage point, “projections for commodities demand logically require some trimming,” the report said.
Global consumption is expected to average 95.7m barrels a day next year, down 100,000 from estimates in last month’s report.
One surprise is the resilient oil demand in China despite its economic slowdown.
“Our preliminary August estimate posted a near double-digit percentage point gain in year-on-year terms despite the otherwise ailing macroeconomic backdrop,” the Paris-based agency said.
Crude oil prices were relatively stable in September and rallied early this month on “expectations of a lower US output and rising tension in the Middle East,” the IEA said.
But they dipped Tuesday following the IEA’s latest forecasts, Brent North Sea crude for delivery in November shedding 13 cents to stand at $49.73 per barrel in afternoon London deals.
US benchmark West Texas Intermediate for delivery in November slid 26 cents to $46.84 per barrel compared with Monday’s close.