The IEA which advises oil-consuming countries on their energy policies noted that rising supplies along with a sharp reduction in demand will cause a glut of oil in the market at least until June 2017 which is in sharp contrast to last month’s forecast where the agency noted that supply would fall by the end of the year.
"It seems the situation has deteriorated strongly in the eyes of OPEC as well as the IEA," said Commerzbank head of commodities strategy Eugen Weinberg.
"I wouldn't be surprised to see this price weakness continue for a while right now, because that was not on the cards, in our opinion." He added.
As oil prices remain under pressure some are predicting that the rumours of a production freeze by Opec are all hot air as a potential raise in interest rates by the US Federal Reserve this year is also expected to pressure the commodity,
"The idea of an oil production freeze makes even less sense if demand falls apart while U.S. monetary stimulus is being removed at the same time," said David Thompson, executive vice-president at Powerhouse, a commodities-focused brokerage in Washington.
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