Oil prices have further to fall before bottoming out amid a surge in production, mainly by OPEC nations, and a weakening of global demand, according to the International Energy Agency's latest forecast.
In the second quarter of 2015, the world's supply of oil was 96.39 million barrels a day, outstripping demand of 93.13 million barrels a day, according to the IEA's Oil Market Report, which described the world oil market as "massively oversupplied."
But it cautions that: "The market's ability to absorb that oversupply is unlikely to last. Onshore storage space is limited. So is the tanker fleet. New refineries do not get built every day."
The report says demand in 2016 will likely remain low.
Reuters reported Friday that the price per barrel of Brent crude oil is up 7 cents at $58.68, but that so far this month the international benchmark has lost more than 7 percent.
The IEA notes that a slowdown in demand this year comes as supplies from the Middle East, Russia and the U.S. are at or near a peak. It says its forecast for a rebalancing "has shifted a bit, but the storyline has not changed. The supply response to lower prices is on the way."
The Wall Street Journal writes:
"World events could further rock the market, the IEA said. Iran is close to a deal with world powers that would lift crippling sanctions on the Islamic Republic in exchange for curbs on its nuclear program. That would open much of the West to Iranian crude exports again, bringing as much as 1 million new barrels a day into the market. The country could raise exports immediately out of 40 million barrels currently stored on its vessels, the IEA said.
"If Greece were to exit the eurozone, it could lead to depressed demand there and throughout Europe, the IEA said."