Oil falls on prediction that demand will ease
Demand for oil worldwide is still growing, but not as fast as previously predicted, the International Energy Agency says in a new report Tuesday.
Lower growth in oil demand raises questions about the strength of the global economy, but in this case it does not appear to signal a new oil glut. Still, the energy agency’s report was enough to rattle oil markets. The benchmark U.S. crude, West Texas Intermediate, fell to $44.90 a barrel, down $1.39 or 3%. Brent crude was down to $47.10, down $1.22 or 2.5%.
The IEA says the world’s oil supplies shrank slightly in August despite more vigorous pumping by Mideast producers.
The IEA’s Oil Market Report was revised to predict that the world will be demanding another 1.3 million barrels a day this year, down 100,000 barrels a day from its previous forecast “due to a more pronounced” slowdown in the third quarter. The slowdown is expected to continue into 2017, when demand will shrink again to 1.2 million barrels a day.
World oil supplies were down 300,000 barrels a day in August due to reduced production in countries that aren’t members of the Organization of the Petroleum Exporting Countries. Higher output in OPEC countries nearly offset the decline, the IEA says. Production was strong, in particular, in Kuwait and the United Arab Emirates.