Oil and natural gas markets are set to remain oversupplied until 2015, the International Energy Agency said on Wednesday, forecasting in its annual medium-term outlook report “comfortable spare capacity” for both energy commodities.

The overall tone of the report contrasted with earlier years, when the western countries’ energy watchdog had warned about potential shortages. Nonetheless, it said: “We should not be complacent. Developing new supplies of oil and gas is in general a long-term undertaking.”

Oil prices reacted with losses, accentuated later in the day by a string of negative economic reports and an increase last week in US crude oil inventories. But natural gas prices rose.

In late afternoon trading, Nymex August West Texas Intermediate fell $1.50 to $76.35 a barrel while ICE August Brent dropped $1.77 to $76.27 a barrel.

Oil has traded within a $70-$85 a barrel band since October, the longest period of stable prices in years.

Nymex July natural gas rose 2.0 per cent to $4.850 per million British thermal units. Gas prices are nearly 65 per cent below a peak of more than $13.5 per mBtu set in July 2008.

In oil, the IEA revised upwards its forecast for rises in global crude consumption to 1.2m barrels a day per year, taking it by 2015 to a total of 91.9m b/d. But it also marked up its projection of global supplies in five years’ time to 96.5m b/d, leaving an ample cushion of spare capacity.

“Higher prices, lower costs and fledgling signs of increased upstream spending have eased some of last year’s concerns about medium-term oil supply prospects,” the IEA said. “For the next few years, the oil market is marked by more comfortable spare capacity than envisaged last year, and the duration of the current gas glut is set to last beyond 2013, at least in some regions.”

But the IEA warned that supply risks abound. “First, there is the ever-present threat of geopolitical disruption surrounding a number of key Opec producers. Second, the potential of the recent Deepwater Horizon disaster in the US Gulf of Mexico [risk delaying] substantial deepwater developments which underpin much of the expected supply growth,” it said.

Even so, the IEA projected that the Opec oil cartel’s spare capacity would remain at a relatively high level of 3.6m b/d by 2015, down from today’s 5.8m b/d.

The watchdog said that level remains much more comfortable than levels that prevailed for much of 2002-2008. But the declining trend suggests more jittery markets ahead.

Elsewhere, shipping costs for bulk raw materials such as iron ore, coal and grains, fell to a nine-month low.

The Baltic Dry Index fell 1.2 per cent to 2,515. The index is down about 40 per cent from its year’s peak on the back of lower demand, new deliveries of ships and fewer vessels at anchor.

Sugar prices rose to a two-month peak as tightness in the physical market squeezed futures. ICE July sugar rose 1.2 per cent to 16.41 cents per pound, up 26 per cent since its trough of 13 cents in May.

Traders said physical sugar was trading at a premium to futures, meaning it made sense to hold the July contract until expiry next Wednesday to take physical delivery, and that was forcing short sellers to cover their positions.