The price for Brent crude oil moved lower by 0.9 percent to start the day in NY at $49.89 per barrel.
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US crude stocks fell last week, the government said on Wednesday, but the decline was much smaller than anticipated, while gasoline stocks decreased sharply. By types of energy categories, healthy vehicle sales and the low oil price environment were expected to stoke demand for transportation fuels.
The price of US light sweet crude was steady around $48.70, up about 0.4 percent in late morning trade.
With demand for OPEC crude expected to rise to an average of 32.52 million bpd in the second half as non-OPEC supply falls and seasonal demand rises, OPEC’s report points to a deficit of 160,000 bpd if the group keeps pumping at May’s rate. “Oil at US$50 (S$67.80) or above is bringing U.S. shale producers back to the market”. The influential Sun newspaper, long a scourge of alleged European Union excess, also came out in support of Britain leaving the EU.
Next year, India’s forecast demand growth of more than 8 per cent, together with China’s slower but still significant 3.3 per cent growth is expected to keep demand growth steady.
The IEA said the oversupply “is likely to dampen prospects of a significant increase in oil prices”.
The report comes as oil markets are showing a tentative if unsettled recovery in which geopolitical concerns are now dominating price movements rather than an over-supply (and failure of demand to keep up) that caused prices to decline from around $114 a barrel in June 2014 to a low of just below $27 a barrel in January. However, we also continue to see further evidence that outside of these disruptions, the rationalization of the oil market’s surplus remains nascent at best: Canadian production is finally restarting, production from other OPEC members continues to beat our expectation and the recent recovery in prices creates risk that non-OPEC production declines less than we expect, especially in the US.
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IEA said that the oil market is balanced due to unplanned outages and demand, particularly from emerging economies.
