Oil prices hit two-month low
london — Oil fell to its lowest in two months on Tuesday, giving up early gains after a forecasting agency estimated world crude supply could overtake demand this year, potentially undermining producer efforts to curb supply.
Brent crude futures fell 72 cents to $61.87 a barrel by 1448 GMT, while US West Texas Intermediate crude futures dropped 78 cents to $58.51.
The Paris-based International Energy Agency raised its forecast for oil demand growth in 2018 to 1.4 million barrels per day, from a previous projection of 1.3 million bpd.
However, rapidly rising output, particularly in the United States, could well outweigh any pick-up in demand and begin to push up global oil inventories, which are now within sight of their five-year average.
“Today, having cut costs dramatically, US producers are enjoying a second wave of growth so extraordinary that in 2018 their increase in liquids production could equal global demand growth,” the IEA said.
“Overall, the IEA confirms its bearish view on global supply and demand, expecting no significant global stock draws in 2018,” Petromatrix strategist Olivier Jakob said.
“Opec has a more bullish view but has been forced to reduce its call-on-OPEC estimate over the last few months and it has the risk of showing further reductions since its forward outlook for US crude seems to be unrealistically low.”
The Organisation of the Petroleum Exporting Countries said on Monday it expected world oil demand to climb by 1.59 million bpd this year, an increase of 60,000 bpd from the previous forecast, reaching 98.6 million bpd. — Reuters