NEW YORK – Oil prices finished sharply lower on Tuesday (Sep 13) as production forecasts called for a continuing supply glut in 2017.
The International Energy Agency, which provides advice to oil-importing countries, said growth in oil demand was slowing while supply was rising, meaning the glut was due to linger “at least through the first half of next year.”
The Paris-based organization had earlier seen the oil oversupply disappearing in the latter part of 2016.
On the New York Mercantile Exchange, a barrel of West Texas Intermediate for October delivery fell US$1.39 to finish at US$44.90.
North Sea Brent for November delivery lost US$1.22, sinking to US$47.10 per barrel on the Intercontinental Exchange in London.
The bearish IEA forecast followed Monday’s report from the Organisation of the Petroleum Exporting Countries, which revised its 2017 daily production forecast for non-OPEC countries upward.
The cartel predicted that supplies would grow by 200,000 barrels per day, with an average production of 56.5 million barrels per day.
OPEC’s members and Russia are due to convene an informal meeting in Algeria this month but investors’ hopes that they will agree to limit production have dimmed in recent days.
“We are a little bit lower. I wouldn’t get over-panicked,” said Bart Melek of TD Securities.
“Basically the market is believing that there is less of a likelihood that OPEC will come up with some sort of a freeze at a time when Kazakhstan and other areas are increasing production,” he added.