Global oil demand growth to slow in 2016

ADDS MORE DETAILS FROM REPORT

The world's demand for oil is expected to slow in 2016 in response to a more pessimistic outlook for the global economy, likely keeping the crude market oversupplied, the International Energy Agency (IEA) said Tuesday.

Global demand growth is expected to slow from its five-year high of 1.8 million barrels per day in 2015, to 1.2 mb/d in 2016, moving closer toward its long-term trend, the IEA said in its monthly oil market report.

That will probably mean a continued oil supply glut next year, especially with the expected arrival of Iranian crude.

A projected marked slowdown in demand growth next year and the anticipated arrival of additional Iranian barrels -– should international sanctions be eased -– are likely to keep the market oversupplied through 2016, it said.

Citing the International Monetary Fund's recent downward revisions on global growth estimates by one-fifth of a percentage point, projections for commodities demand logically require some trimming, the report said

Global consumption is expected to average 95.7 million barrels a day next year, down 100,000 from estimates in last month's report.

One surprise is the resilient oil demand in China despite its economic slowdown.

Our preliminary August estimate posted a near double-digit percentage point gain in year-on-year terms despite the otherwise ailing macroeconomic backdrop, the Paris-based agency said.

Crude oil prices were relatively stable in September and have rallied early this month on expectations of a lower US output and rising tension in the Middle East, the IEA said.

European benchmark Brent oil for November delivery rose 55 cents to $50.41 a barrel in London on Tuesday.

US benchmark West Texas Intermediate for November delivery was up 69 cents to $47.79 a barrel on the New York Mercantile Exchange.