The International Energy Agency says global markets have absorbed the excess oil that has weighed on crude prices for two years, and now oil demand growth, one pillar supporting prices, is in decline, FuelFix.com reports.
In its monthly oil market report released today, the IEA says it believes oil demand growth could sink to a daily 1.2 million barrels in the third quarter, as global economic growth stumbles.
The demand growth figure is nearly 15% lower than during the previous three months and down from 2.5 million barrels a day in the same period last year. Next year, oil demand could average 1.3 million barrels a day.
One reason is refineries are expected to slow down as they enter maintenance season in the fourth quarter, even as oil producing nations like Saudi Arabia and Iraq work to increase output.
“The massive overhang of stocks is also keeping a lid on prices, with both newly produced and stored crude competing for market share in an increasingly volatile refinery margin environment,” the IEA says.
The IEA predicts refiners will take a “hefty draw” in the third quarter as they burn through the world’s oil inventories.
But a glut of petroleum products has kept crude prices contained as gasoline makers put out more fuel than the market could handle.
