High energy prices threaten economic damage, but likely to continue: IEA

High energy prices threaten economic damage, but likely to continue: IEA

High energy prices threaten economic damage, but likely to continue: IEA

"This strain could be with us for some time and it will likely be accompanied by higher prices, however much we regret them and their potential negative impact on the global economy", the Paris-based IEA said.

OPEC cut its forecast of global demand growth for oil next year for a third straight month on Thursday, citing headwinds facing the broader economy from trade disputes and volatile emerging markets.

Brent crude futures rose 89c, or 1.1%, to $81.15 a barrel by 4.55am GMT. Iranian oil exports in September fell to 1.63 million bpd, down 800,000 bpd from recent 2Q18 peaks, the agency estimated. Meanwhile, Brent oil price for December delivery gained 0.17 US dollars to 80.43 USA dollars per barrel.

Brent crude settled up 17 cents a barrel at US$80.43, after dropping 3.4 per cent on Thursday.

The International Energy Agency said in its monthly report that the world's spare oil production capacity was already down to only 2 percent of global demand, with further reductions likely to come. The Organization of the Petroleum Exporting Countries (OPEC) made a similar move on Thursday.

The output increase from the second quarter was led by OPEC, which boosted production by 500,000 barrels a day, and the Americas, which saw a rise of 400,000 barrels a day.

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'This is due to a weaker economic outlook, trade concerns, higher oil prices and a revision to Chinese data, ' said the IEA, which advises industrialised countries on energy policy.

US commercial crude oil inventories fell by 5.8 million barrels in the week to August 17 to 408.36 million barrels, the Energy Information Administration (EIA) said on Wednesday.

The commodities markets kept investors glued to it during the week gone by with crude oil swinging to the news reports coming out of the US, Iran and Saudi Arabia while all eyes were on the precious metals amid strong volatility in equity and currency markets.

USA oil production reached a record-high 15.6 million b/d in July, up 2.4 million b/d year on year, while U.S. offshore production in the Gulf of Mexico rose by 190,000 b/d to a record-high 1.85 million b/d, it said.

"We look at the fundamentals, and at the moment there is plentiful supply, and at the moment we have seen a modest downgrade to demand growth, and we think the likelihood is that if we are to change our demand outlook for 2019, it's more likely to be the downside than the upside".

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