Global oil demand expected to cool

Global demand for oil will grow less than expected next year due to a weaker world economy, though the oversupply of crude in the market is ending, the International Energy Agency said on Thursday.

The Paris-based agency, which consults oil-importing nations, lowered its forecast for demand growth next year to 1.2 million barrels a day from 1.3 million barrels a day previously. That would be a slowdown from this year's growth of 1.4 million barrels a day.

However, the agency said in its monthly report that it expects oversupply to have ended in the third quarter of this year, with inventories likely to drop after a long period of increases.

That, the IEA said, will "help pave the way to a sustained tightening of the crude oil balance".

The price of oil has fallen in recent weeks. On Thursday, prices ticked up. Benchmark US crude rose US$1.78, or 4.3 per cent, to close at US$43.49 a barrel in New York. Brent crude, used to price international oils, gained US$1.99, or 4.3 per cent, to close at US$46.04 in London.

"It's been such an oversupplied market for a long period of time, to get that supply-demand closer to being in balance, or to be in balance, is a huge driver," said David Chalupnik, head of equities for Nuveen Asset Management. "That should at least support the commodity price."