There is little chance of a respite for oil in the next few months as global demand growth will "ease back considerably" in 2016, according to the latest forecasts from the International Energy Agency (IEA).
Crude oil prices have spiralled lower in January with what the IEA called "brimming stockpiles" pushing global benchmarks below $30 a barrel. On Tuesday, Brent crude for April delivery was trading at $32.80 a barrel and U.S. crude was at $29.93, showing little let-up for prices.
The IEA cast doubt over a recovery for oil markets in its latest monthly report on Tuesday, saying that global oil demand growth, which peaked at a five-year high of 1.6 million barrels a day in 2015, was forecast to "ease back considerably" in 2016 to 1.2 mb/d.
Worryingly for market watchers fearing a global slowdown, oil demand growth was to be "pulled down by notable slowdowns in Europe, China and the U.S. Early elements of the projected slowdown surfaced in the fourth quarter of 2015," the IEA said.
OPEC, the 12-member group led by Saudi Arabia, has been seen as the reason for the decline in oil prices since it decided in November 2014 not to cut production as part of a strategy to retain market share and pressure rival producers.
Nevertheless, OPEC has forecast that global demand for oil would rise in 2016 and that this would be accompanied by a decline in supply from some producers (such as its non -OPEC rivals) and that this would help to rebalance supply and demand in the market and, subsequently, support prices.