Weekly figures released on Wednesday by the US Energy Department showed that crude stocks remained high last week at 523.6 million barrels, up 0.2 per cent from the prior week and still more than 15 per cent above the same point a year ago.
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Talk of another oil summit, this time in Algeria, helped rebound oil prices on Tuesday but these quickly plummeted once it emerged that there was infighting between OPEC members, with some saying holding such meetings was futile given Iran’s additional production numbers, in addition to the Saudis pumping oil at record levels.
A global products glut that has led storage tanks from Houston to Singapore to reach near capacity is also weighing on oil prices, as analysts warn that only large- scale refinery run cuts can clear the excess. Moreover, EIA reported last week that crude inventories increased to 1.4 million barrels for the week ending August 3, preceded by an increase of 1.7 million barrels in the week before.
Oversupply concerns continue to weigh on the oil price, though today’s losses are relatively minor, after the weekly United States crude inventories report today.
Production from OPEC’s members increased by 46,400 barrels a day to 33.106 million a day in July, according to external sources compiled by OPEC.
On the New York Mercantile Exchange, a barrel of West Texas Intermediate for September delivery fell US$1.06 to US$41.71.
The re-balancing of world markets will resume towards the end of the year, according to OPEC. The supply side may also pressure middle distillates as stockpiles remain high across the world, especially in the OECD, where inventories are now around 80 million barrels higher than the latest five-year average, OPEC commented.
Traders remain skeptical that OPEC will be able to agree to a new production cap.
The actions of some of the group’s biggest producers, however, were distinctly bearish.
Still, he said, any cooperation between the two would nearly certainly be temporary.
Oil’s return to a bear market last week prompted a flurry of words from members of the Organization of Petroleum Exporting Countries. Iraq’s direct submission showed its output rising by 57,000 barrels a day last month to 4.606 million a day.
A monthly report from the Organisation of Petroleum Exporting Countries showed Saudi Arabian oil production at almost 10.5 million barrels per day in July. OPEC predicted 2017 world-wide oil demand would grow by 1.15 million barrels a day, unchanged from July’s report.
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Non-OPEC oil supply will contract by 79,000 barrels a day this year, the cartel said, an upward revision of 90,000 barrels a day reflecting higher-than-expected output in the second quarter from the U.S. and U.K. In 2017, non-OPEC supply will decline by 150,000 barrels a day, OPEC said, following a downward revision of 40,000 barrels from last month.
