Brent crude fell $1.55, or 1.9%, to $81.54 US a barrel late Thursday morning, off the session low of $81.14, its weakest since September 26. Additionally, the IEA also lowered its global oil demand growth estimate for 2018 and 2019 by 0.11 million barrels per day (mbpd) to 1.28 mbpd and 1.36 mbpd respectively.
The International Energy Agency cut forecasts for oil demand this year and next because of growing threats to global economic growth, yet warned that dwindling spare oil supplies will keep prices high.
"Both global oil demand and supply are now close to new, historically significant peaks at 100 mb/d, and neither show signs of ceasing to grow any time soon".
Such disclosures from a respected agency, combined with persistent signs throughout this week that the crude industry could compensate for losses of Iran exports without incurring undue tightening, seemed to baffle media that for the past few months had been predicting calamity due to the USA sanctions against the Islamic republic.
"The decline may deepen significantly ahead of USA sanctions - and subsequently as final cargoes are delivered", said the IEA, which advises major oil consumers on energy policy. The Organization of the Petroleum Exporting Countries (OPEC) made a similar move on Thursday.
Western Canada Select slumped below US$20 a barrel on Thursday, the lowest in more than two years, continuing a brutal streak of declines for the country's main grade of crude.
US oil prices grew 0.52 percent Friday thanks to improving market sentiment.
OPEC, Russia and others such as USA shale companies had increased production sharply since May, the IEA said, raising global output by 1.4 million barrels per day (bpd).
Commenting on the report, "The weaker outlook has gotten a raised profile in the market, but there's potential for a real supply crunch toward the end of this year".
USA oil production reached a record-high 15.6 million b/d in July, up 2.4 million b/d year on year, while U.S. offshore production in the Gulf of Mexico rose by 190,000 b/d to a record-high 1.85 million b/d, it said.
In the USA, the Energy Information Administration reported nationwide inventories rose 5.99 million barrels last week, more than the 2.8 million increase predicted in a Bloomberg survey. In the U.S. Gulf of Mexico, companies cut output by 40 percent on Thursday because of Hurricane Michael, even as some operators began returning crews to offshore platforms.
Michael crashed ashore Florida on Wednesday as the third most powerful hurricane to strike the US mainland, leaving seven people least.