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Oil steady on IEA report, U.S. output forecast

LONDON - Brent crude oil steadied near $50 a barrel on Tuesday after the west's energy watchdog forecast a global supply glut would last through 2016 thanks to slowing demand growth. The International Energy Agency (IEA) said the world oil market...

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LONDON - Brent crude oil steadied near $50 a barrel on Tuesday after the west's energy watchdog forecast a global supply glut would last through 2016 thanks to slowing demand growth.

The International Energy Agency (IEA) said the world oil market would remain oversupplied for at least another year despite falls in output from non-OPEC producers.

North Sea Brent crude was up 14 cents a barrel at $50.00 by 1230 GMT. U.S. light crude was up 22 cents at $47.32.

Both benchmarks have been volatile over the last year.

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Brent slumped to a low of almost $42 a barrel in August, from above $115 in June 2014. It rallied to above $54 at the end of last week on signs of falling production in the United States, before easing down again this week.

Analysts say oil prices are struggling to find a range, supported by expectations of lower supply in the future but depressed by a global surplus for some time to come.

"A projected marked slowdown in demand growth next year and the anticipated arrival of additional Iranian barrels – should international sanctions be eased – are likely to keep the market oversupplied through 2016," the IEA said in its monthly report.

The Paris-based agency said global oil demand would increase by 1.21 million barrels per day (bpd) in 2016, down 150,000 bpd from its forecast last month.

Oil prices dropped more than 5 percent on Monday on news of higher output by the Organization of the Petroleum Exporting Countries and on expectations of higher U.S. crude stockpiles.

But countering the lackluster demand outlook, the first signs of a tightening supply picture have also emerged.

Next year, non-OPEC output is expected to contract by nearly 500,000 bpd, the IEA said, as drilling activity slows in the United States and companies elsewhere delay projects.

"The bullish sign in the IEA report is that non non-OPEC supply has been revised lower," said Dominic Haywood, oil analyst at Energy Aspects.

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He said data was starting to show the policy of OPEC producers, notably Saudi Arabia, to keep production high to maintain market share was starting to dent production in the United States and elsewhere.

Investors awaited data on U.S. oil inventories due later on Tuesday and on Wednesday. A Reuters survey estimated that U.S. crude stockpiles increased by 2.8 million barrels on average in the week ended Oct. 9.

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