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Oil excess hits record high of 3bn barrels

Oil excess hits record high of 3bn barrels

According to the International Energy Agency (IEA), the pressure on oil prices is likely to extend into next year due to a record glut on the global market.

The latest monthly report from the IEA said that stockpiles now stand at a record three billion barrels. The news affected the European stock markets on Friday, with the FTSE 100 dropping by almost 1%.

More than halved

Oil prices have dropped by more than half over the last 18 months, with several factors playing a part, and the effects continue to ripple across the UK economy.

Increased shale oil output in the US, along with a continued refusal of the OPEC nations to cut production, has led to the current record breaking oversupply situation, pushing down prices even further.

Last Friday, Brent crude dropped nearly 1%, and US crude was down 2.8%.

Months to clear

US production is expected to fall next year, but even so, it will take months to clear the glut, according to the IEA

The agency said: "This massive cushion has inflated even as the global oil market adjusts to $50 per barrel. Demand growth has risen to a five-year high of nearly two million barrels per day."

"Gains in demand have been outpaced by vigorous production from OPEC and resilient non-OPEC supply," it explained.

However, the IEA expects growth in global demand for oil to fall next year as lower prices become less of a novelty.


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