United States oil falls to lowest in over two months on swelling inventories

However, “a more prolonged period of lower oil prices can not be ruled out”, IEA said in its report – especially if Organization of the Petroleum Exporting Countries members seek to preserve market share in competition with new sources in the USA and elsewhere.

Traders are also keeping an eye on a USA stockpiles report from the Energy Information Administration due out later in the week, looking for any signs of a pick-up in demand. “We do not expect any surprises from the next OPEC meeting, and OPEC’s experiment in letting price bring adjustments to the world’s oil balance has yet to run its full course”, the bank said.

“The net result is brimming crude oil stocks that offer an unprecedented buffer against geopolitical shocks or unexpected supply disruptions”, said the Paris-based watchdog, which advises industrialized nations on energy.

There has been massive over supply of oil in the markets.

Further evidence of stockpiling, expectations of a rise in U.S. rates and anaemic economic growth figures have helped push down prices recently. The session low was $44.30, the lowest since August 27.

EIA forecast that Brent crude oil prices will average $54 per barrel in 2015 and $56 in 2016.

The decline in investment, however, has not been enough to reverse oil’s price weakness. West Texas Intermediate, the USA benchmark price for crude oil, lost 0.6 percent to $41.50 per barrel.

Crude supplies typically fall at this time of year as refiners complete seasonal maintenance and start processing more crude oil into refined products.

Growth in global demand for crude is set to slow next year as the allure of cheap oil fades, the worldwide Energy Agency (IEA) said yesterday.

Brent North Sea crude for December won 58 cents to stand at $44.64 a barrel in London midday deals compared with Thursday’s close.

“Despite the resilience of producers such as Russian Federation, non-OPEC supply is forecast to contract by more than 0.6mb/d next year”.

The EIA estimated that production rose by 25,000 barrels a day last week to 9.2 million barrels a day.