Brent crude fell to a 17-month low below $98 a barrel on Thursday, down for the sixth straight session as worries over ample supply and weak demand outweighed concerns that conflict in the Middle East could curb oil production.
North Sea crude oil hit a high above $115 in June as Islamist insurgents swept across northern Iraq, taking control of several oilfields, but prices have now fallen more than 15 percent from their highs as supply from other countries has increased much faster than demand.
The West’s energy watchdog said on Thursday slowing global economic growth, particularly in China and Europe, had curbed oil demand severely at a time when supplies were growing steadily, particularly from North America.
“The recent slowdown in demand growth is nothing short of remarkable,” the International Energy Agency (IEA) said in a monthly report, revising down its oil demand growth projections for 2014 and 2015.
Brent crude for October was 70 cents lower at $97.34 a barrel by 0910 GMT, after closing down $1.12 in the previous session. It earlier hit an intraday low of $97.10, its weakest since April 18, 2013.
U.S. crude was down 60 cents at $91.07 a barrel.
The IEA said it expects non-OPEC supply to expand by 1.6 million barrels per day in 2014, and by another 1.3 million bpd in 2015 on the back of the shale oil boom in North America.
That means the world will need less oil from the Organization of the Petroleum Exporting Countries, and the IEA cut its estimate of demand for OPEC crude and stocks for 2015 by 300,000 bpd to 29.6 million bpd.
In August, OPEC pumped 30.31 million bpd.
OPEC has also cut its estimates of demand for its own crude this year and the next, pointing to a surplus of more than 1 million bpd in 2015 if the group keeps output at current levels.
But geopolitical worries remain a serious concern.
President Barack Obama told Americans on Wednesday he had authorised U.S. airstrikes for the first time in Syria and more attacks in Iraq in a broad escalation of a campaign against the Islamic State militant group.
Iraq is OPEC’s second-biggest oil producer and exporter and investors are concerned about the potential impact on supplies, although Iraq’s oil industry has so far remained largely unaffected by the turmoil in the north of the country.
“People are worried about unexpected consequences of an escalation with the potential of a greater reaction from jihadists,” said Tony Nunan, risk manager at Mitsubishi Corp.
Underlining the global oil surplus, data from the U.S. Energy Information Administration on Wednesday showed an increase in some U.S. oil product inventories.
Stocks of gasoline and distillates jumped by 2.4 million and 4.1 million barrels respectively in the week to Sept. 5, compared with analysts’ expectations of a 157,000-barrel drop for gasoline and a 571,000-barrel increase for distillates, EIA data showed.
U.S. crude oil stocks fell by 972,000 barrels last week, smaller than analysts’ projections for a drop of 1.1 million barrels. .
Libya could amplify the oversupply concerns after Prime Minister Abdullah al-Thinni said oil production was expected to rise to 1 million bpd in October.