The oil markets woke up at the end of the summer of 2014 realizing that there was not as much demand out there as they thought. Suddenly, the world is flush with supplies, and there aren’t enough buyers out there to gobble it all up.
That has Brent prices at their lowest levels in over two years.
The International Energy Agency said that weakening demand for oil worldwide is “nothing short of remarkable.” What is even more remarkable is the blunt language used by the IEA, usually a buttoned-up and bureaucratic bunch.
But for the third month in a row the IEA was forced to slash its demand forecast for 2014. The agency now expects oil demand to grow by just 900,000 barrels per day (bpd) between 2013 and 2014, a downward revision of 65,000 bpd from a month earlier. It is also 300,000 bpd less than what the IEA expected for the year in its July report.
For 2015, growth in oil demand is expected to only reach 1.2 million bpd, or 165,000 bpd less than the agency thought one month ago. The agency pins the slowdown on weak growth in Europe and China.
Saudi Oil Minister Ali al-Naimi responded to reporters’ questions about what OPEC would do in response. Prices “always fluctuate and this is normal,” he said. He dismissed the notion that OPEC would resort to drastic measures to prop up prices.
“We are confident that the current price drop does not call for an emergency meeting.... The price drop was not big…