Workers use machinery to move drill sections on the drilling floor of the oil derrick in the Salym Petroleum Development oil fields near the Bazhenov shale formation in Salym, Russia, on Tuesday, Feb. 4, 2014. Salym Petroleum Development, the venture between Shell and Gazprom Neft, has started drilling the first of five horizontal wells over the next two years that will employ multi-fracturing technology, according to a statement today. Photographer: Andrey Rudakov/Bloomberg

The world’s appetite for crude oil slowed at a “remarkable” pace during the second quarter because of weak economic growth in Europe and China, prompting the International Energy Agency to revise lower its demand forecasts for 2014 and 2015.

In its widely followed monthly report, the west’s energy watchdog said on Thursday that global oil demand growth had slowed to below 500,000 barrels a day in the three months to June – the first time it has reached this level in two-and-a-half years.

Slowing demand and plentiful supplies – in spite of conflicts raging in countries such as Iraq and Libya – have together pushed down the price of Brent crude, the international oil marker.

ICE Brent October fell $1.40 to $96.72 a barrel, the lowest in more than two years, in intraday trading.

“While much attention has been paid to the relentless growth in North American unconventional supply, demand headwinds have perhaps been less widely noticed,” the IEA said in its report. “The recent slowdown in demand growth is nothing short of remarkable.”

The weaker outlook for economic growth in Europe and China prompted the IEA to reduce its forecast for global oil demand growth for 2014 and 2015 to 900,000 b/d and 1.2m b/d. This would take projected total demand for this year to 92.6m b/d and next year to 93.8m b/d.

“Oil is a leading indicator, so maybe the global economic recovery is weaker than we think,” said Antoine Halff, author of the report. “At the same time you can see more structural changes in consumer behaviour and a shift towards more efficient technologies trickling through the numbers.”

The oil market has shifted in recent weeks into a so-called “contango” structure – jargon for when prices for future delivery exceed spot prices. This is prompting market participants to build stocks in anticipation of future supply disruptions, the IEA said.

“Clearly the price structure encourages further builds. Given the volatile situation in the Middle East and north Africa, this is a benefit to global energy security,” said the report.

Chiming with data released by the Opec oil cartel on Wednesday, the IEA lowered its forecast for the ‘call’ on Opec oil – the amount members must pump to meet global demand – by 200,000 b/d for the fourth quarter to 30.6m b/d and 300,000 b/d for 2015 to 29.6 mb/d.

Saudi Arabia, Opec’s largest producer, cut August supply by 330,000 b/d to 9.68m b/d, “in response to lower requests from customers”, according to the IEA.

The sharp drop in the price of Brent since mid-June has prompted some market participants to question whether Saudi Arabia will curb its output to keep global supply in check and support prices.

Saudi exports, which the IEA said are shifting more towards Asia amid better margins, are likely to have fallen below 7m b/d for the last four months, their lowest level since September 2011.

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