By Cassie Werber By Nicole Friedman, Cassie Werber and Sarah Kent 

NEW YORK--Crude-oil prices continued to slide on Tuesday after the International Energy Agency cut its forecasts for oil-demand growth this year and next.

In its closely watched monthly oil market report, the Paris-based energy watchdog cut its forecast for 2014 oil-demand growth by 200,000 barrels a day to just 700,000 barrels a day.

Prices have fallen more than 20% since mid-June as ample global crude supplies have grown faster than demand.

The Organization of the Petroleum Exporting Countries pumped more oil last month than it has in 13 months, while non-OPEC producers added 2.1 million barrels a day in the period, or more than 2% of global daily demand, the IEA said.

Brent crude oil for November delivery recently fell $1.47, or 1.7%, to $87.42 a barrel on ICE Futures Europe, on track to settle at a fresh near four-year low. The U.S. benchmark crude recently fell 69 cents, or 0.8%, to $85.05 a barrel on the New York Mercantile Exchange.

Weak European economic data also weighed on prices Tuesday. German economic sentiment unexpectedly slumped in September, and September inflation data for France, Italy and Spain fell short of expectations.

The IEA said it sees demand picking up next year, increasing by an annual 1.1 million barrels a day. But oil supply looks set to continue growing strongly, the agency said.

"It would appear that involuntary cuts [in production] due to military activities in Iraq and Libya may be required to slow downward price momentum," said energy-advisory firm Ritterbusch & Associates in a note.

The agency's estimated supply growth doesn't include the possibility of eased sanctions on Iran, which could add more supply to the global market, said Olivier Jakob of consultancy Petromatrix in a note. The deadline for the current round of negotiations on Iran's nuclear program is Nov. 24.

Barclays said it is likely that Brent will hold below $100 a barrel for a "prolonged period."

Refineries, meanwhile, are taking advantage of the relatively cheap raw material and are increasing output, said analysts at Energy Aspects, though this won't solve the problems of oversupply.

"This will simply transfer the crude overhang to the products market, as refineries run down their crude stocks and essentially translate them into products stocks," Energy Aspects wrote in a note to clients. "Prices will have to go lower to balance this market."

November reformulated gasoline blendstock, or RBOB, recently fell 3.60 cents, or 1.6%, to $2.2193 a gallon.

November diesel fell 3.31 cents, or 1.3%, to $2.5237 a gallon.

Write to Cassie Werber at cassie.werber@wsj.com, Nicole Friedman at nicole.friedman@wsj.com, Cassie Werber at cassie.werber@wsj.com and Sarah Kent at sarah.kent@wsj.com

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