Oil tumbles 3 percent after both IEA, OPEC see glut persisting
- Indexes hit record highs as Trump rally continues
- Unusual 11 Mid-Day Movers 12/8: (COOL) (TLRD) (DRAM) Higher; (SHIP) (OHRP) (MLSS) Lower
- Lower for longer, ECB scales back asset buys
- lululemon athletica (LULU) Tops Q3 EPS by 4c; Adj.-Comps Outpaced Views
- Oil rises above $50 on renewed hopes for output cuts
A pump jack is seen at sunrise near Bakersfield, California October 14, 2014. REUTERS/Lucy Nicholson/File Photo
Get inside Wall Street with StreetInsider Premium. Claim your 2-week free trial here.
By Barani Krishnan
NEW YORK (Reuters) - Oil prices fell as much as 3 percent on Tuesday after both the world's energy watchdog and OPEC revised forecasts that signaled the global crude glut could persist for much longer than expected.
The International Energy Agency (IEA), which advises oil-consuming countries on their energy policies, said a sharp slowdown in oil demand growth, coupled with ballooning inventories and rising supply, means the market will be oversupplied at least through the first half of 2017. [IEA/M]
The IEA's comments follow a surprisingly bearish outlook from the Organization of the Petroleum Exporting Countries on Monday that also pointed to a larger surplus next year due to new fields in non-member countries. U.S. shale drillers are also proving more resilient than expected to cheap crude, OPEC said. [OPEC/M]
"It seems the situation has deteriorated strongly in the eyes of OPEC, as well as the IEA," said Commerzbank head of commodities strategy Eugen Weinberg.
"I wouldn't be surprised to see this price weakness continue for a while, because that was not on the cards, in our opinion."
A stronger dollar <.DXY> also weighed on crude and other commodities denominated in the U.S. unit, making them less affordable to holders of currencies such as the euro. U.S. equity markets <.SPX> were down nearly 2 percent, extending the bearish sentiment across risky markets. [FRX/] [.N]
U.S. West Texas Intermediate crude
In post-settlement trade, the market pared losses after trade group the American Petroleum Institute (API) reported a crude build of 1.4 million barrels for the week ended Sept. 9, smaller than the 3.8 million-barrel rise expected by analysts. The U.S. government will issue official inventory data on Wednesday. [API/S] [EIA/S]
On Monday, oil prices rose on the back of a weak dollar and reduced expectations that U.S. Federal Reserve will raise interest rates in September.
Even so, expectations of U.S. monetary tightening before the end of the year, along with the bleak demand outlook projected by the IEA, further diminished market optimism that the world's largest oil producers might agree to freeze output when they meet for talks in Algeria on Sept. 26-28.
"The idea of an oil production freeze makes even less sense if demand falls apart while U.S. monetary stimulus is being removed at the same time," said David Thompson, executive vice-president at Powerhouse, a commodities-focused brokerage in Washington.
(Additional reporting by Amanda Cooper in LONDON and Mark Tay in SINGAPORE; Editing by Marguerita Choy and Alden Bentley)
Serious News for Serious Traders! Try StreetInsider.com Premium Free!
You May Also Be Interested In
- Only five non-OPEC producers so far attending talks to widen output cut
- U.S. estimates 50,000 Islamic State fighters killed so far: U.S. official
- Notable 52-Week Highs and Lows 12/5: (AKS) (FTI) (PES) High; (AZN) (ONTX) (CYTX) Low
Create E-mail Alert Related CategoriesCommodities, Reuters
Related EntitiesCrude Oil, OPEC
Sign up for StreetInsider Free!
Receive full access to all new and archived articles, unlimited portfolio tracking, e-mail alerts, custom newswires and RSS feeds - and more!