The FINANCIAL — Global oil demand will ease next year on the weaker outlook for the world economy and oversupply in the market, the International Energy Agency said on on November 13, according to Nasdaq.
The IEA said global demand growth is forecast to slow to 1.2 million barrels a day in 2016 after surging to 1.8 million barrels a day this year. Economic conditions are expected to remain problematic in countries such as China, and factors that have recently fuelled consumption are expected to fade, it said.
Commercial stocks from countries in the Organization for Economic Cooperation and Development stood at a record near 3 billion barrels by the end of September, even as the global oil market adjusts to oil trading at $50 a barrel oil.
“The net result is brimming crude oil stocks that offer an unprecedented buffer against geopolitical shocks or unexpected supply disruptions,” said the Paris-based watchdog, which advises industrialized nations on energy.
Despite the resilience of producers such as Russia, non-OPEC supply is forecast to contract by more than 600,000 per day next year. U.S. light tight oil, the driver of non-OPEC growth, is expected to decline by 600,000 barrels a day in 2016, the IEA said.
Supply from the Organization of the Petroleum Exporting Countries held steady in October at 31.76 million barrels a day, with declines in Iraq and Kuwait offset by higher supply from Libya, Saudi Arabia and Nigeria, the IEA said.
A tightening in fundamentals has lifted next year’s demand for OPEC crude from the IEA’s report last month by 200,000 to 31.3 million barrels a day.
The IEA added that top oil exporter Saudi Arabia, which led OPEC’s decision last year to maintain the group’s official production ceiling despite the collapse in oil prices, is showing no sign of reversing its policy to defend its market share instead of the price.
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