Oil prices slide on supply glut warning
Prior to the revised forecast, prices were already falling after OPEC sparked its worries about the oversupply crisis
Oil prices slumped Tuesday as the International Energy Agency warned that a global supply glut would last longer than expected, ahead of a meeting of producers to tackle the issue. Prior to Tuesday's revised forecast from the IEA watchdog, prices were already falling after OPEC sparked its own fresh worries about the oversupply crisis.
Around 1530 GMT, US benchmark West Texas Intermediate for delivery in October was down $1.43 -- or 3.0 percent -- at $44.86 a barrel.
“Oil remains under pressure again today after the IEA reported that oil demand growth will be lower than expected this year,” said Craig Erlam, senior market analyst at Oanda trading group. The Paris-based organization had earlier seen the oil oversupply disappearing in the latter part of 2016.
Oil prices were falling back once more after the commodity rallied for most of August on hopes of a deal at an upcoming meeting between OPEC and Russia to limit output.
But the market has taken a beating in recent weeks as traders grow doubtful that the Algiers gathering later this month will end in an agreement. “Oil prices are under pressure on renewed oversupply concerns,” Bernard Aw, an analyst with IG Markets in Singapore, told AFP.
Forecasts that US commercial crude stockpiles will show a rise when fresh data is released Wednesday would give “credence to OPEC's prediction that output from non-OPEC producers will increase next year”, Aw added.
Traders are keeping watch also on the Federal Reserve ahead of a policy meeting next week, with speculation rife that it could lift US interest rates. Such a move would strengthen the dollar, hurting crude prices even further.