Oil price unlikely to rise much further, global agency says

The price of oil is unlikely to rise much further after rallying almost 90 per cent since January, as the global market shows signs of stabilising, the International Energy Agency (IEA) said Tuesday.

The Paris-based agency, which advises the world's top oil-consuming nations, nudged up its estimate for global oil demand this year in its monthly report. It noted, however, that supply and past inventories remain high.

"At halfway in 2016, the oil market looks to be balancing," said the IEA in its monthly market report.

After touching a 13-year low in January, the international price of oil has rallied to trade above US$50 a barrel in recent days and has struggled to advance any further. On Tuesday, Brent crude, the benchmark for international oil, was down 52 cents at US$49.83 a barrel in London. Benchmark US crude dropped 39 cents to US$48.49 per barrel on the New York Mercantile Exchange.

In its report, the IEA raised its forecast for world demand in 2016 to 96.1 million barrels a day, up 0.1 million barrels from its previous prediction. It expects demand to grow next year by 1.3 million barrels a day, the same as this year.

However, the IEA noted that large volumes of production remain affected by shutdowns. That's true particularly in Nigeria, where regional militants have blown up pipelines, and Libya, which is struggling to emerge from conflict. When that oil starts returning to market, it would boost supply, weighing on prices.

Inventories are also high globally after three years of overproduction, the agency said. "This is likely to dampen prospects of a significant increase in oil prices," its report concluded.