According to the International Energy Agency’s (IEA) recently-released IEA Oil Market Report (OMR) for August, global oil demand growth is expected to slow down in 2017.
The prevision goes against the recent forecast by the Organisation of Petroleum Exporting Countries (OPEC) reported earlier today.
“The 2017 forecast – though still above-trend – is 0.1 million barrels per day (bpd) below our previous expectations due to a dimmer macroeconomic outlook. The 2016 outlook is unchanged from last month’s report,” IEA informed.
Oil Prices Fall on IEA Oil Demand Forecast
IEA foresees a slowdown in global oil demand growth from 1.4 million bpd in 2016 to 1.2 million bpd in 2017.
Following IEA’s report, oil fell further, reaching a week-low. This morning, Brent was down by 4.5% to $43.64, while WTI had fallen 5% to $41.21.
In the meantime, it expects an increase in global oil supply of about 800,000 over the month of July, a result of an increase in both OPEC and non-OPEC production.
Overall, production was 215,000 bpd lower than over the same period in 2015, following declines in non-OPEC producing countries.
Excess Supply Remains a Challenge
Additionally, the IEA expects non-OPEC production to drop by 900,000 this year, before a 300,000 bpd rebound in 2017.
Inside the OPEC, oil output has also seen an increase as Saudi Arabia pushes output to peak levels and Iraq increases oil pumping figures.
Although the reduction in stock should help achieve a bigger balance in the crude market, IEA is saying that it will take some time for this to happen, with stockpiles currently standing at record levels.
This last factor is also pressuring prices to stay down, together with decreasing demand and the rebound in non-OPEC supplies.
Production from high-cost producers continues to drop as oil and gas firms are forced to cut down on spending and drilling activities.