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FTSE 100 edges higher but BP and Shell slip on oil glut fears

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Nick FletcherTuesday 13 September 2016 11.18 BST

Oil shares are among the biggest fallers after crude prices slid further in the wake of a downbeat report from the International Energy Agency. The agency said the oil market would be oversupplied until at least the first six months of 2017, given a sharp slowdown in demand and rising stocks. A month ago it predicted suppy and demand would be broadly in balance for the rest of the year, and inventories would fall sharply.

Chris Beauchamp, chief market analyst at IG, said:

The IEA has joined OPEC in pouring more cold water on the oil price this morning. After OPEC flipped its prediction of dwindling non-OPEC supply in 2017, instead warning that it was set to rise due to a major new oilfield in Kazakhstan coming online, the IEA has issued a stark warning that the pickup in demand seen in the first half of the year has completely evaporated. It has cut its demand forecasts for the second half and the whole of 2017 and is now predicting the glut will remain in the global market for the whole of next year. Oil prices are down this morning, although the real capitulation could come towards the end of the month if OPEC and Russia fail to agree a supply freeze

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