Oil Falls on Darkening Outlook

Oil Falls on Darkening OutlookOil Falls on Darkening Outlook

Oil fell on Tuesday following a series of gloomy predictions on demand growth that suggested the global overhang of unused inventories may persist for much longer than investors anticipate and temper any pick-up in price.

Brent crude futures traded down $1.06, or 2.2%, at $47.26 per barrel. US West Texas Intermediate futures fell $1.14, or 2.5%, to $45.15 a barrel. The International Energy Agency said a sharp slowdown in global oil demand growth, coupled with ballooning inventories and rising supply, means the crude market will be oversupplied at least through the first six months of 2017, CNBC reported.

This contrasts with the agency’s last forecast a month ago for supply and demand to be broadly in balance over the rest of this year and for inventories to fall swiftly. The IEA’s latest comments follow a surprisingly bearish outlook from OPEC the day before.

“It seems the situation has deteriorated strongly in the eyes of OPEC as well as the IEA,” Commerzbank head of commodities strategy Eugen Weinberg said.

“I wouldn’t be surprised to see this price weakness continue for a while right now, because that was not on the cards, in our opinion.”

Upbeat Chinese data on industrial output growth for August failed to lift oil prices as the crude market remained in a profit-taking mode, traders said.

China’s industrial output grew the fastest in five months as demand for products from coal to cars rebounded thanks to higher government spending and a year-long credit and property boom.