High oil stocks, falling demand add to OPEC challenge

LONDON – Oil inventories are at the highest in nearly two decades and global fuel demand is falling more than expected, increasing the challenge for OPEC in seeking to balance supply with demand.

Physical oil markets are looking more bearish than a month ago as the International Energy Agency and other forecasters cut global demand estimates, physical crude prices weaken and oil inventories balloon.

Oil futures fell more than 8 percent on Monday to below $46 a barrel, hit in part by caution about the pace of any economic recovery and its impact on oil demand. Still, crude has risen from a low of $32.40 in December.

The signs of a weakening market mean that the Organization of the Petroleum Exporting Countries may need to maintain existing supply curbs for longer to bring down inventories or even consider further cutbacks.