Global crude oil stockpiles have ballooned to a record high, providing the world markets with an unprecedented “three billion barrel cushion,” a report by the International Energy Agency (IEA) noted Friday. However, a slowing global economy could worsen the glut it said.
Vigorous production by Organization of Petroleum Exporting Countries (OPEC) countries, Russia and North America has outpaced demand so far in 2015, keeping oil prices firmly below $50 per barrel and prolonging the surplus, which is currently at its highest in a decade, the report said.
The pace of global stockpiling slowed during the third quarter to 1.6 million barrels per day from 2.3 million barrels per day during the second quarter but remained significantly above the historical average.
The IEA noted that factors that have seen global oil demand growth surge in 2015 are "likely to give way" in 2016, indicating that bulging stock levels will add further pressure to crude oil prices.
The agency said a mild winter in Europe and the U.S. and problematic conditions in emerging markets like China could worsen the glut as there may be no change in the supply situation for the near-term with Russian output likely to remain robust in 2016 as well.
Post-recession bounces in Europe and strong demand in India pushed global oil demand to a five-year high in the third quarter of 2015 , but a glut in supply resulting from a shale oil boom and OPEC cartel politics has already weighed heavily on oil prices, according to CNBC.