Oil prices fell on Thursday after the International Energy Agency (IEA) said the oil market could stay oversupplied for longer than expected due to rising production and limited output cuts by some OPEC exporters.
The Paris-based IEA said rising consumption in Germany and the United States was helping boost oil demand but the world still faced a fuel glut.
Brent crude was down 40 cents at $47.34 a barrel by 1120 GMT. US light crude was down 35 cents at $45.14.
Oil prices have dropped in recent weeks to levels not seen since the end of last year as investors have lost faith in a deal between OPEC and non-OPEC producers to reduce output, while US shale oil production has risen sharply.
“Each month something seems to come along to raise doubts about the pace of the rebalancing process,” the IEA report said.
“This month, there are two hitches: a dramatic recovery in oil production from Libya and Nigeria and a lower rate of compliance by OPEC with its own output agreement.”
Oil inventories in industrialized nations remain high despite a modest drop in May. OECD stocks are still 266 million barrels above the five-year average, the IEA said.
The Organization of the Petroleum Exporting Countries said on Wednesday the world would need only 32.2 million barrels per day (bpd) of its crude next year, down 60,000 bpd from this year and about 400,000 bpd less than it pumped in June.
OPEC said its production rose by 393,000 bpd in June to 32.611 million bpd, thanks to extra output from Nigeria and Libya.
That came despite a pledge by OPEC to curb production by about 1.2 million bpd between January this year and March 2018, while Russia and other non-OPEC producers say they will hold back half as much.
OPEC’s compliance with cuts slumped to 78 percent last month from 95 percent in May as higher-than-allowed output from Algeria, Ecuador, Gabon, Iraq, the UAE and Venezuela offset strong compliance from Saudi Arabia, Kuwait, Qatar and Angola, the IEA said.
The demand outlook was also boosted after data showed China imported 8.55 million bpd in the first six months of the year, up 13.8 percent on the same period in 2016, making it the world’s biggest crude importer ahead of the United States.
“We are definitely seeing robust demand growth (in China),” said Neil Beveridge, senior oil analyst at Sanford C. Bernstein.