The price of oil tumbled further today following the publication of the latest market outlook from the International Energy Agency.
The IEA Oil Market Report for December states the organisation, which represents 29 nations, has axed its forecasts for 2015 global oil demand growth by 230,000 barrels per day to 0.9 million barrels on the back of lower expectations for the Former Soviet Union and other oil‐exporting countries.
The price of WTI subsequently dropped 2 per cent to $58.76 while Brent fell 1 per cent to $62.69.
The organisation’s prediction marks its fourth cut over the past five months and it asserts that the strong dollar and the lifting of subsidies have so far limited supportive price effects on demand.
The IEA says: “Several years of record high prices have induced the root cause of today’s rout: a surge in non-OPEC supply to its highest growth ever and a contraction in demand growth to five-year lows.
“Barring a disorderly production response, it may well take some time for supply and demand to respond to the price rout.”
Looking at where the price of oil may go next, Axa Wealth head of investing Adrian Lowcock says: “Trying to predict where the oil price may move next is difficult, even for the experts, but there is a clear benefit to consumers and businesses in a lower oil price. The longer it stays low the better it will be for economic growth and company profits.
”A low oil price should continue to feed through to better economic growth and increased consumer spending, both of which will help the profitability of companies.”