The International Energy Agency's gloomy forecast on the global outlook for oil demand sent crude prices down. Fred Katayama reports.
A sharp change in the outlook for oil. The International Energy Agency now says the global oil glut will last much longer than anticipated. It says global demand is slowing down sharply partly due to weakness in China and India. At the same time, global production is rising. OPEC more than made up for the decline by non-OPEC producers. The agency's September report says the oil market will be oversupplied through at least the first half of next year. Just last month, the agency had predicted inventories would fall quickly. This follows a surprisingly bearish forecast from OPEC on Monday. Commerzbank commodities strategy head Eugen Weinberg said, "It seems the situation has deteriorated strongly in the eyes of OPEC as well as the IEA. I wouldn't be surprised to see this price weakness continue for a while right now because that was not in the cards." The bearish report sent U.S. crude prices down more than 2 percent, extending oil's retreat following a sharp rally in August.