Crude surplus to linger on until end of 2016: Agency

The International Energy Agency (IEA) says an excess supply of crude oil coupled with an unseasonably warm weather will keep markets saturated until at least late 2016.

Warm winter weather around the world cut global oil demand growth to a one-year low of 1 million barrels per day in the fourth quarter of 2015, down from a near five-year high of 2.1 million bpd in the third quarter, Reuters reported Tuesday.

The IEA left its estimate of growth in global demand for 2016 unchanged from its previous monthly report at around 1.2 million bpd.

Brent crude futures have fallen to their lowest level since late 2003, tumbling below $30 a barrel, after OPEC said in December it would not cut output to arrest the price slide despite global oversupply.

“We conclude that the oil market faces the prospect of a third successive year when supply will exceed demand by 1 million bpd and there will be enormous strain on the ability of the oil system to absorb it efficiently,” the IEA said.

With the world economy slowing, the IEA said it had cut its forecast for 2016 OPEC crude oil demand by 300,000 bpd to 31.7 million bpd.

The IEA is sticking with its forecast for a decline of around 600,000 bpd in non-OPEC output, which it said had been surprisingly resilient in the face of tumbling crude oil prices.