* IEA sees overhang persisting for most of 2016
* Vitol sees slower demand growth in 2016
* Weekly API inventory data due at 4:30 p.m. EST (2130 GMT)
(Updates prices)
By Amanda Cooper
LONDON, Feb 9 (Reuters) - Oil prices eased on Tuesday,
dragged lower by a broad decline across major financial markets
and by a growing expectation that global demand will not grow
quickly enough to erase the overhang of crude any time soon.
The world will store unwanted oil for most of 2016 as
declines in U.S. output take time and OPEC is unlikely to cut a
deal with other producers to reduce ballooning output, the
International Energy Agency said.
The agency cut its forecast for 2016 oil demand growth,
which now stands at 1.17 million barrels per day (bpd) following
a five-year high of 1.6 million in 2015, and reduced its
estimate of demand for OPEC crude.
Oil traders are even more bearish.
The world's largest, Vitol VITOLV.UL , said it expects
global oil demand to grow by around 1 million bpd this year,
down from last year's rate 1.6 million bpd.
"I don't think we can rely on low prices driving much
incremental demand at this point," Vitol executive member Chris
Bake said at an IP Week conference.
Brent crude futures LCOc1 were last down 18 cents at
$32.70 a barrel by 1455 GMT, down from Monday's session high of
$34.68. U.S. futures CLc1 were down 19 cents at $29.88.
Financial markets have been rattled in the last week by
concern about banks given signs of a potential global slowdown,
prompting buying of perceived safe-haven assets such as gold
XAU= , German Bunds DE10YT=TWEB and the Swiss franc CHF= .
Oil, which had gained nearly 30 percent in the two weeks to
early February, breaking above $35, has receded, in line with a
retreat in stocks and industrial commodities.
Echoing the view of the IEA, a Reuters survey showed U.S.
crude stocks likely rose by 3.9 million barrels in the week
ended on Feb. 5, meaning global oversupply is unlikely to abate
any time soon. API/S EIA/S
"The fundamentals haven't shifted. The market remains in
surplus, and while that's the case, it is very difficult for
prices to sustain any gains," said Michael McCarthy, chief
market strategist at CMC Markets in Sydney.
There is also little sign of any coordination on production
cuts among big producers outside the United States after weekend
talks between OPEC members Saudi Arabia and Venezuela yielded no
concrete result.
"Such cuts would after all restore equilibrium to the oil
market. However, we think there is little prospect of this
actually happening, as the interests and motives of the relevant
countries are too different," Commerzbank (DE:CBKG) said in a report.
"The reduction of oversupply will have to come from
elsewhere, namely from falling U.S. oil production."