London — Crude oil futures were lower at midday in Europe on Friday, weighed on by the International Energy Agency saying Thursday it expected weaker economic growth to rein in oil demand growth.
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At 1129 GMT, ICE February Brent crude futures were down 32 cents/b at $61.13/b, while the NYMEX January light sweet crude contract was down 17 cents at $52.41/b, after fluctuating throughout the trading morning.
"The OECD's lower expectation for the world economy in 2019 could reduce oil demand growth by roughly 100,000 b/d," the IEA said in its monthly oil market report.
In light of that, market participants remained uncertain if production cuts announced by OPEC and allies last week will be sufficient to provide further support to prices rather than just help establish a floor, as OECD oil stock levels had risen above the five-year average in October for the first time since March.
That left global oil markets still searching for direction as bullish sentiment following news of the agreed upon supply cuts by OPEC and its allies was followed by expectations of weaker oil demand growth on the back of weaker economic growth assumptions.
"A global oil glut is therefore very much in the making and the oversupply alarm bells will only get louder," analysts at PVM said in a note.
"The overriding theme in the oil market will therefore continue to be one of oversupply. Needless to say, barring any unexpected supply disruptions or additional OPEC+ cuts, Brent will struggle to break out of its $60 norm."
Concerns over high inventory data were also echoed in the market with analysts keeping a close eye on stock levels.
With the OPEC cuts expected to have a substantial impact on the global supply and demand balance in the first quarter of 2019, the market may need to wait for the cuts to percolate to inventory data, Barclays analysts said in a note. However, any subsequent changes in inventory levels were expected to "moderate the contango in current front-month time spreads", they said.
As of 1129 GMT, the US dollar index was 0.40% higher at 97.48.
--Tarek El-Mesallamy, firstname.lastname@example.org
--Edited by Dan Lalor, email@example.com