Over the previous two sessions, oil fell 6%, pressured by data showing large weekly builds in USA petroleum products and forecasts by the world's energy watchdog and OPEC that signaled the global crude glut could persist into 2017.
The International Energy Agency slashed its consumption growth forecast for this year by 100,000 barrels per day and sees an even weaker expansion in 2017.
The organisation reversed its previous projection that stubborn global oversupply would be soaked up by demand in the latter part of 2016.
Demand growth in developed countries has "all but vanished" and slowed drastically in heavy consumers in Asia such as China and India, the IEA said. Regarding the outlook, IEA's senior oil economist, Matt Parry said: "both Chinese and European oil demand growth have all but vanished by 3Q16".
Oil prices took a pounding Tuesday after a leading industry group said global oil demand growth is slowing by more than previously thought, largely because of a more pronounced economic slowdown during the third quarter of the year.
Gasoline futures were also supported by news BP Plc will conduct repairs this weekend on the large crude distillation unit at its 413,500 barrel per day Whiting, Indiana refinery, cutting production by at least 50 percent. This clearly indicates that USA producers are beginning to see light at the end of tunnel and have been gradually increasing their oil production.
"Nigeria's problems are clearing and along with Libya, this could mean 1 million b/d of crude entering the market", Olivier Jakob of Switzerland's Petromatrix said. OPEC said oil markets would remain heavily oversupplied next year if the group maintains its now elevated levels of production.
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The biggest losers have been debt-laden US operators in the shale-oil industry, where investments fell by 52% in the past two years, the IEA said.
Here are the three things you need to know about the oil markets today, along with two stocks worth buying. The question is when supply and demand will return to balance.
Analysts expect US government data for the latest week on Wednesday to show a stockpile build of 3.8 million barrels of crude [EIA/S].
OPEC and other oil producers meet in Algeria on September 26-28 to discuss a crude production freeze.
On Friday, Baker Hughes will report the latest USA rig count data for the week ended September 16th. Distillate fuel inventories, however, recorded a more substantial increase, of 4.6 million barrels, after rising by 3.4 million barrels in the week before.
On the supply side, rising output by members of the Organization of the Petroleum Exporting Countries has more than made up for falling output among non-OPEC countries, especially the United States, formerly the engine of non-OPEC supply increases, the IEA said.
