Oil prices fell by 1.0 per cent on Wednesday, continuing Tuesday's slide after the International Energy Agency cast doubts over the past few months' narrative of tightening fuel markets, reports Reuters.
Brent crude futures LCOc1 were at $61.61 per barrel at 0745 GMT, down 60 cents, or 1 per cent from their last close. US West Texas Intermediate (WTI) crude CLc1 was at $55.14 per barrel, down 56 cents, or 1.0 per cent.
The price falls mean that crude prices are now down by around 5 per cent since hitting 2015 highs last week, ending a 40-per cent rally between June and early November.
"Crude prices dropped dramatically after the IEA forecast a gloomy outlook for the near future ... The drop was arguably exacerbated by a global selloff in other commodities," said Sukrit Vijayakar, director of energy consultancy Trifecta.
The International Energy Agency (IEA) on Tuesday cut its oil demand growth forecast by 100,000 barrels per day (bpd) for this year and next, to an estimated 1.5 million bpd in 2017 and 1.3 million bpd in 2018.
"The oil market faces a difficult challenge in 1Q18 with supply expected to exceed demand by 600,000 bpd followed by another, smaller, surplus of 200,000 bpd in 2Q18," the agency said. The demand slowdown could mean world oil consumption may not, as many expect, breach 100 million bpd next year, while supplies are likely to exceed that level.
The IEA report countered the Organisation of the Petroleum Exporting Countries, which just a day earlier said 2018 would see a strong rise in oil demand.
Vijayakar said a reported increase in US crude inventories was also weighing on prices.
The American Petroleum Institute (API) said on Tuesday that US crude inventories rose by 6.5 million barrels in the week to Nov 10 to 461.8 million.
US government inventory data is due later on Wednesday. On the supply side, rising US output also pressured prices.
US oil production C-OUT-T-EIA has already increased by more than 14 per cent since mid-2016 to 9.62 million bpd and is expected to grow further.
The IEA said non-OPEC production will add 1.4 million bpd of additional production in 2018. The IEA's outlook pressures OPEC to keep restraining output in order to defend crude prices, which its members rely on for revenue.
AFP adds: Oil prices tumbled more than one per cent on Wednesday in ASia, extending the previous day's sharp falls after the International Energy Agency warned of weakening demand.
A recent rally had sent the commodity to two-year highs, fuelled by hopes producers will extend output cuts well into 2018 as well as escalating tensions between crude giants Saudi Arabia and Iran.
But the Paris-based IAE said in a monthly report that it had revised down its forecasts for this year and next, adding that markets are expected to be oversupplied in the current quarter and going into 2018.
The announcement sent US benchmark West Texas Intermediate (WTI) diving 1.9 per cent Tuesday while Brent shed 1.5 per cent.
And those losses continued in Asia. WTI was down 58 cents at $55.12 and Brent lost 73 cents to $61.48.
Analysts have warned of a correction, saying the commodity was overbought and markets well supplied.
"The long-awaited short-term correction in oil prices finally occurred overnight," said OANDA senior market analyst Jeffrey Halley.
"Given the bullish run and extended long positioning across commodities in general in recent times, it was only going to (take) one straw to break the camel's back and see a mass rush for the fire exits."