Crude Consolidates Despite Warning of Slowing Demand

After tumbling on Thursday, crude oil price took a breather on Friday despite a report from the International Energy Agency that said that global demand would slow in 2016. Weaker than expected growth figures from Europe should also weigh on crude oil prices.

The IEA said that global oil demand will slow to 1.2 million barrels per day in 2016, down from the 1.5 million barrels per day reached this year, although demand is first expected to lift to 1.8 million barrels per day due to low prices. Despite the high level of demand, the agency reports that global inventories have lifted to a new record, of nearly 3 billion barrels, thanks to “vigorous production” from both OPEC and non-OPEC oil exporters. The IEA notes Saudi Arabia’s ongoing strategy to defend market share rather than price, and that OPEC will lift its production ceiling to accommodate Indonesia, which is re-joining the cartel.

Eurozone GDP growth slowed to 0.3% quarter over quarter in the third quarter of the year, from 0.4% in the second quarter. This was below initial expectations for a steady growth rate of 0.4%. The annual rate still accelerated to 1.6% year over year from 1.5%, but the data miss seems to add weight to Draghi’s warning about the weakening growth outlook and is adding to speculation of further easing measures from the ECB in December.

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