Rising world crude supplies and signs that higher energy costs are hurting economic growth suggest oil's long price rally may finally have peaked, the International Energy Agency (IEA) said today.
A surge in production by the OPEC cartel, a rebound in supply by non-OPEC countries and signs of slowing growth in fuel demand has already helped oil prices decline 15 per cent from record highs hit in late October, the IEA said.
"Higher stocks, better sweet crude supply and lower forecast GDP growth suggest a seasonal peak," the IEA said in its monthly Oil Market Report.
"But sustained near-capacity operations are needed to ensure ample winter heating oil supply," said the IEA, which advises industrialised nations on energy policy.
Spare supplies are now starting to rebuild after a year when oil prices rallied nearly 50 percent this year as explosive demand growth in China strained world production capacity and ran down inventories.
Oil stocks in industrialised nations built by 560,000 barrels per day in the third quarter, and will build counterseasonally by another 1.3 million bpd in the fourth quarter if OPEC keeps supply at current levels, the IEA said.
Demand growth is also coming off the boil as increases in China's power generation capacity eases pressure for oil-burning, and Indian demand contracted for the first time in a year, the Paris-based agency said.
"Many countries have begun to feel the economic impact of high energy and commodity prices on their economies. We may be witnessing early signs of lagged price effects on global economic growth," the IEA said.