Oil plummeted today after the International Energy Agency (IEA) pushed back its expectations for the long-awaited recovery of the embattled market.
The Paris-based group said that the supply dynamic is unlikely to change significantly in the coming months, meaning it will remain oversupplied until at least the second half of 2017. It had previously forecast no surplus by this point.
Brent crude, the global benchmark, tumbled as low as 2.36 per cent to $47.18 per barrel this morning. Its US counterpart, West Texas Intermediate crude, slipped as much as 2.7 per cent to $45.04.
"As for the market's return to balance — it looks like we may have to wait a while longer," it said.
The IEA chopped its forecasts for global oil demand growth in 2016 and 2017 by 100,000 barrels per day (bpd) and 200,000 bpd respectively. It now expects the world to buy 97.3m bpd this year and 1.3m bpd next year.
"Recent pillars of demand growth — China and India — are wobbling ... economic worries in developing countries haven't helped either. Unexpected gains in Europe has vanished, while momentum in the US has slowed dramatically," it said.
"The picture of the supply side is equally confounding. Despite oil's collapse and resulting investment cuts, global oil production is still expanding — although nowhere near the breakneck pace of 2015.
"High-cost non-Opec products have been hit particularly hard ... however, the loss has been more than made up for by Opec.
"Saudi Arabia's vigorous production has allowed it to overtake the US and become the world's largest oil producer. Indeed, Opec's lower-cost Middle East producers — Saudi Arabia, Kuwait the UAE and Iraq — are all at or near all-time highs."