Published on October 20, 2014

Global oil demand is under immense pressure from the sluggish economic growth and this along with the oversupply has pushed down prices even further.

IEA has cut down forecasts for oil demand for the third consecutive month. Combined with the slowing supplies, this may spell doom for the oil market.

Experts suggest that further drops in oil price would probably hit supply or give the required boost to demand. Benchmark West Texas Intermediate oil was priced at $85 and Brent oil was available at around $88.

IEA explained that Brent was profitable at $80 per barrel and that the expensive shale oil from North America may put a stop to prices from crossing the $90 mark.

The IEA expressed surprise at the speed of slowing oil demandgrowth but the dramatic rise in supplies was a crucial factor behind falling oil prices and increased stockbuilding.

IEA expects oil demand to rise by 700,000 barrels per day to 92.4 million bpd for 2014, which is 200,000 bpd lower than its previous projection.

This steep decline in demand growth in European and Asian members of the Organization for Economic Cooperation and Development (OECD) was at par with the average growth of 1 million bpd in non-OECD members.

Output from the Organization of Petroleum Exporting Countries (OPEC) increased by 415,000 bpd to 30.66 million bpd, backed by improved output from Libya and Iraq.

While output from other countries rose by 495,000 bpd to 56.7 million bpd due to the end of maintenance turnarounds in North America, Russia, the North Sea and eastern Europe.

For 2015, IEA cut down its global oil demand forecast from 93.8 million bpd to 93.5 million bpd. However, this figure indicates a growth of about 1.1 million bpd from the level this year because demand will likely improve as the global economy picks up pace.