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Global oil glut to continue until mid-2017: International Energy Agency

The Paris-based organisation had earlier seen the oil oversupply disappearing in the latter part of 2016. (Representative image) Photograph: (Getty)

WION New Delhi, India Sep 13, 2016, 03.48 PM (IST)
The International Energy Agency on Tuesday warned that the global oil glut looks set to go on at least six months longer than previously anticipated. 

The IEA said the glut was due to linger owing to slowdown in demand and constant rise in supply.

The oil glut has hurt producers but it means cheaper pump prices for consumers at least through the first half of next year. 

The Paris-based organisation had earlier seen the oil oversupply disappearing in the latter part of 2016.

In its monthly report, the IEA said the timing of the world oil market's return to balance is "the big question." It added that the current prices - above $45 - would suggest supply falling and strong demand growth.

The IEA's latest comments follow a surprisingly bearish outlook from OPEC on Monday. Crude prices were down 47 cents at $47.85 a barrel.

The trend may fuel speculation of a possible production freeze being agreed between OPEC and non-OPEC member Russia at a meeting in Algeria later this month.

Analyst Olivier Jakob, of Switzerland-based Petromatrix, said OPEC was "trapped" as non-OPEC supply had been able to adapt to lower prices better than expected.

"The IEA data is also suggesting that an OPEC 'freeze' will not be enough to rebalance the market in 2017," he said in a note to investors.

China and India, which had been key drivers recently of demand growth, are "wobbling", it said, while a slowdown in the US and economic concerns in developing countries have also contributed to the surprise development.

(WION with inputs from agencies)
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