Both the major oil benchmarks, Brent and WTI declined today after a report from International Energy Agency (IEA) warned on the higher supplies amid lower demand. In its monthly report, IEA warned that supply would continue to outstrip demand in the near future, at least till the first half of the next year. It said, “With the price of oil at current levels, one would expect supply to contract and demand to grow strongly. However, the opposite now seems to be happening”. According to the report, on the supply side, any cutbacks from producers outside OPEC got offset by increased production from OPEC. The global oil supply currently stands at 96.9 million barrels per day, which is just down 300,000 barrels per day from a year back. Supplies from OPEC are up almost a million barrels from a year ago.
It also warns on the inventory buildup. The world is sitting on 3.1 billion barrels of stockpiles and refineries are processing crude at the slowest pace in at least a decade. The early year report from the IEA has been encouraging as crude buying from both India and China picked up but according to this latest report that trend has dramatically subsided.
IEA has already revised its demand growth forecast by 100,000 barrels per day to 1.3 million barrels per day and now sees the possibility of the demand growth cooling to 1.2 million barrels per day.
WTI is down today by almost 2 percent, while Brent is down 1.8 percent. WTI is currently trading at $45.1 per barrel and Brent at $47.2 per barrel.