Oil prices little-changed as IEA sees slower demand growth

In addition, the Kurdish Regional Government, which also controls some production of oil in the northern part of Iraq, is trading less crude with its national government over disputes in payments, reported the IEA.

In its Oil Market Report for July the Paris-based agency, which tracks oil needs of the developed world said, oil demand which peaked in the first quarter at 1.8 mbpd will continue to ease in 2015 and into 2016 as temporary support fades.

The 40% drop from $115 per barrel in June (2014) to less than $70 per barrel in December, and declining further to $47 in January (2015), anxious policy-makers and producers the world over. It forecast zero growth in non-OPEC oil supply in 2016 after an increase of 1 million bpd in 2015.

A brief period of high profitability for the world’s oil refineries is likely to come to an end as quickly as it began, the global Energy Agency (IEA) said on Friday.

But WTI’s slump to just above $50 on Tuesday raised questions about whether oil was on the cusp of another major selloff, after the rout from last summer through March that slashed global crude prices by more than 60 percent.

Brent, the global benchmark, rose 12 cents, or 0.2 percent, to $58.73 a barrel on ICE Futures Europe. While the market appears to be temporarily assuaged, the bigger and scarier fact is its impact on the Chinese economy as well as oil prices.

Top oil exporter Saudi Arabia continues to keep output and export supply high, maintaining fully contracted volumes to Asia in August. This rate is hard hitting on states which have oil as their main export and petrol companies, with both expecting to record further losses unless the situation changes.

But a recent period of much lower oil prices is beginning to take its toll on oil production in non-OPEC countries, particularly the United States, where an unprecedented rise in production of light oil from shale has transformed the oil industry over the last five years.

“With ever-increasing measures to curb greenhouse gasses emissions and increase efficiency, we forecast OECD (oil products) demand to resume its downward trend from 2017 onwards”, the IEA report said.

Brent crude oil was up 56 cents at $59.17 a barrel by 1100 GMT.

Continued growth in global petroleum and other liquids inventories are also holding the crude markets from rising.

“Data on the demand side out of China, such as crude oil imports, has been weak lately and has contributed to oversupply fears”, says Carsten Menke, commodities analyst at Julius Baer. “The structural imbalance created by sustained prices over $100 a barrel was years in the making”.