International Energy Agency expects a slower global demand for oil in 2016. In its October report, the Paris-based agency projected global demand of oil for the upcoming year to be 1.2 million barrels per day, down from its September outlook of 1.4 mb/d.
In August, oil prices were down owing to deeper concern over the health of global economy, especially about the crackdowns in China. Prices were volatile in September. However, it rallied in early October on reduced output in U.S. and tensions in the Middle East.
IEA said the world oil supply was steady in September, as the decline in non-OPEC production was offset by improved production in OPEC nations.
The report observed that the market would experience oversupply through 2016 in view of the marked slowdown in demand growth. In addition, there would be the arrival of additional Iranian barrels as six major economies have agreed to lift sanctions.
U.S. and China, the top world consumers, in a clever utilization of lower oil scenario, have been buying more oil from the market, boosting growth to five-year high of 1.8 mb/d in 2015. IEA also noted that the stimulus from lower oil prices will fade in 2016 as oil demand will slow by 0.6 mb/d.
According to IEA, production in non-OPEC regions is on a fast decline, despite higher production in Brazil and Russia during August and September. Output from U.S. also eased to 0.3 mb/d from 1.6 mb/d in the first quarter. Total non-OPEC production would decline by around 0.5 mb/d next year as an impact of 20 percent reduction in global upstream spending.
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