Oil prices rose as much as 1 per cent on Wednesday in anticipation the US government would report a weekly drop in crude and gasoline stockpiles, tempering glut worries heightened by Saudi Arabia’s record high oil output.
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OPEC’s smaller producers, which have driven calls to cap the group’s output, could only look on as prices tumbled more than 50 percent since mid 2014. “A headline draw of 1 million barrels in crude means nothing to me”. According to energy sector reports, in 2017 demand could grow by 1.2 to 1.5 million BPD.
The cartel has been pumping relentlessly for the last two years, aiming to defend its market share despite the collapsing oil prices. Forecast Brent prices average $58/Bbl in the fourth quarter of 2017, reflecting the potential for more significant inventory draws beyond the forecast period.
In other energy trading, wholesale gasoline slipped 2 cents to $1.35 a gallon, while heating oil lost a penny to $1.33 a gallon. The contract fell 0.9 percent to $44.98 on Tuesday.
Just a day ago, oil prices had rallied, with WTI gaining almost 3 per cent, rebounding from last week’s selloff when it fell to an April low of US$39.19.
USA stocks recovered from a late-afternoon slide to eke out small gains Tuesday, nudging the Nasdaq composite to its second record close in less than a week. In 2017, demand for OPEC crude is forecast at 33.0 mln barrels daily, in line with the previous report and 1.2 mln barrels a day higher than in 2016, the OPEC reported.
The monthly average spot price of Brent crude oil decreased by $3 per barrel (Bbl) in July, to $45/Bbl, which was the first monthly decrease since January, Kallanish Energy reports.
The EIA said it expected a smaller decline of 700,000 barrels per day (bpd) in USA crude oil production in 2016 than the 820,000-bpd drop it forecast a month ago as an uptick in drilling will lead to more output later this year.
Weakness in global oil markets, which has dragged prices to a three-month low, may persist as demand slows seasonally and fuel inventories remain abundant, OPEC said in its monthly report Wednesday.
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Aside from oil, the EIA estimates the amount of electricity generated using natural gas reached a record high in July compared to the record set twelve months prior. Saudi Arabia kept its full contractual crude supplies to Asia for September, according to three officials at the region’s refiners.
