Oil declines as world glut seen extending into 2017

The price of oil dropped yesterday as the International Energy Agency (IEA) changed its view on global over-supply, seeing a glut persisting into 2017.

The oil surplus is set to last longer than previously predicted, as demand growth slumps and output proves resilient, the agency said.

“The IEA said the supply overhang will persist longer than previously expected,” said Gene McGillian, a senior analyst and broker at Tradition Energy in Connecticut.

“Also, there are expectations that US inventories will post a big build as all the imports that were delayed arrive.”

Oil has fluctuated since rallying in August amid speculation the Organization of Petroleum Exporting Countries (Opec) and Russia would agree on measures to stabilise the market at a meeting later this month.

All solutions are possible, Algeria’s energy minister said last week when asked whether producers could raise output within the framework of a freeze. Rising Opec production has offset the effect of declining supplies elsewhere, maintaining the oversupply, the IEA said.

Yesterday, Brent for November settlement slipped $1, or 2.1%, to $47.32 a barrel on the London-based ICE Futures Europe exchange.

Global oil consumption growth sagged to a two-year low in the third quarter as demand faltered in China and India, while record output from Opec’s Gulf members is compounding the glut, the agency said in the monthly report.

“This was a marked shift in outlook by the IEA,” said Harry Tchilinguirian, head of commodity-markets strategy at BNP Paribas in London.

“Opec’s long game got a little longer, implying the need for oil prices to remain lower for longer to spur the necessary adjustments in supply for the re-balancing of the market.”

Opec flipped its forecasts for rivals’ supplies in 2017, predicting a rise in output from outside the group instead of a decline, according to a monthly report earlier this week.

Production from outside the group will rise 200,000 barrels a day next year, against 150,000 a day expected a month ago.


Lifestyle

To instantly power up your look, veer towards the hard shoulder.Bold shoulder: How to instantly power up your look

Plums are a wonderful autumn fruit, useful for all sorts of recipes both sweet and savoury. In Ireland we are blessed with wonderfully sweet plums.Currabinny Cooks: Juicy plums work for both sweet and savoury dishes

The rise of home skincare devices doesn't mean that salons and clinics no longer serve a purpose.The Skin Nerd: Don’t try this at home — new treatments in the salon

Millions of gamers watched Fortnite reach breaking point on Sunday night, with ten seasons of mysterious storyline culminating in meteors hitting the island and everything disappearing.GameTech: End of beginning for Fortnite as Chapter 2 finally goes live

More From The Irish Examiner