Huge overhang from the past two years could be dampening oil price recovery, according to the International Energy Agency. Fred Katayama reports.
The expanding global oil glut threatens to pressure oil prices despite strong demand growth, says the International Energy Agency. The inventories in industrialized countries rose to a record high in May and kept rising in June. Also Wednesday, the U.S. government reported that domestic crude stockpiles fell less than expected last week. That bearish data pushed oil down more than four percent. Andrew Lebow is senior partner at Commodity Research Group. (SOUNDBITE) ANDREW LEBOW, SENIOR PARTNER AT COMMODITY RESEARCH GROUP, (ENGLISH) SAYING: "I think it's gonna be a long slog to diminish this supply, you know. Good analogy would be the market going up or down escalator holding a boulder on its shoulders. Eventually it's gonna get there . Eventually the boulder is gonna get off the market. It's Sisyphus, of course." The IEA says demand is growing in India, China and Europe. OPEC output rose by 400,000 barrels a day in June to an eight year high. A big spike came from Middle Eastern producers. Earlier this year, crude prices slumped to their lowest level in over a decade. That forced many producers to curb output, and prices recovered to around $50 in recent months. But the IEA says the production curbs are not enough to reduce the glut that has accumulated over the past two years.