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IEA says oil glut remains a major dampener on prices

Published 2016-07-13, 04:00 a/m
© Reuters. IEA says oil glut remains a major dampener on prices
LCO
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LONDON, July 13 (Reuters) - The global glut in oil is
refusing to ease and acts as a major dampener on crude prices
despite robust demand growth and steep declines in non-OPEC
production, the International Energy Agency said on Wednesday.
The IEA, which coordinates the energy policies of industrial
nations, said it had revised up its forecasts of 2016 and 2017
global oil demand growth by 0.1 million barrels per day from
last month to 1.4 million and 1.3 million bpd respectively.
It said demand was growing thanks to good consumption in
India, China and, surprisingly, Europe.
"This (European demand growth) is unlikely to last, though,
with the ongoing precariousness of the European economies now
dealing with added uncertainty following the result of the UK
referendum on membership of the European Union," it added.
Oil prices LCOc1 slumped to their lowest in over a decade
at $27 a barrel earlier this year from as high as $115 in 2014
after OPEC raised production to fight for market share against
higher-cost producers such as the United States.
The slump forced many producers outside the Organization of
the Petroleum Exporting Countries to curb output and prices
recovered to around $50 in recent months, also supported by
production outages in countries such as Nigeria and Canada.
But it was not enough to reduce the glut that had
accumulated over the past two years. Commercial inventories in
industrialised nations rose by 13.5 million barrels in May to a
record high of 3.074 billion, the Paris-based IEA said.
Inventories kept building in June, pushing oil in floating
storage - one of the most expensive methods of storing oil - to
its highest levels since 2009, the IEA said.

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