NEW YORK, Feb. 9 (UPI) -- Crude oil prices moved lower in early Tuesday trading after the International Energy Agency warned of a prolonged market downturn.
"Having peaked at a five-year high of 1.6 million barrels per day in 2015, global oil demand growth is forecast to ease back considerably in 2016, to 1.2 million bpd, pulled down by notable slowdowns in Europe, China and the United States," the IEA said in its latest monthly market report.
Fears over the pace of the growth in the Chinese economy escalated when trigger mechanisms halted trading on the Shanghai Composite after stocks plummeted heavily to start the new year. Chinese fears are compounded by slow growth in Europe and spillover from a weak energy sector in the United States.
Crude oil prices have stayed below $40 per barrel for 41 consecutive days, the longest streak since 2004, on concerns slow economic growth was leaving the markets heavily favoring the supply side. The U.S. Energy Information Administration reported domestic crude oil inventories increased by 7.8 million barrels for the week ending Jan. 29.
IEA demand expectations dragged on oil prices early in the trading day in New York. Brent crude oil was off about 0.6 percent to $32.66 per barrel. The U.S. benchmark, West Texas Intermediate, mirrored Brent's decline to start the day at $29.51 per barrel.
Talks of possible production cuts from members of the Organization of Petroleum Exporting Countries put positive pressure on crude oil prices in late January. OPEC denied the validity of the rumors and the IEA said Tuesday that "Saudi Arabia, Iraq and a sanctions-free Iran all turned up the taps" last month, adding to the oversupplied market.
An analysis of expected spending trends for North American energy companies from consultant group IHS used $40 per barrel as a low-end estimate for crude oil in 2016.
Crude oil prices dropped to around $27 per barrel in mid-January. In a Tuesday interview with Bloomberg News, Jeff Currie, the head of commodities research at Goldman Sachs, said he "wouldn't be surprised" of oil drops below $20 per barrel.