It is quite hard to state categorically what will happen to global oil markets before the end of this year, but indicators reveal that OPEC members wield a strong influence on crude oil production and its ancillary price indexes.
Advertisement
The EIA also reported that us gasoline stocks fell 2.8 million barrels last week in the second-biggest weekly draw for gasoline since mid-April.
“While it is not unusual to see Saudi production ramping up in the summer given higher demand for crude to be used for power generation, what is unusual is that production is now at a record high, above the peak seen last summer”, Matt Smith of ClipperData wrote in a blog post.
Saudi production in July rose by 30,100 barrels a day from a year earlier, OPEC said in its monthly report Wednesday, citing secondary sources such as shippers, analysts and industry executives.
Saudi Arabia will try to keep its production going despite what other OPEC members might desire, while Iran will nearly certainly keep increasing production after the removal of the United States and European Union sanctions earlier this year.
“In any case, many oil forecasters, including the EIA, expect the crude market to be under-supplied in the second half of next year”. Data released by China’s General Administration of Customs showed that oil export jumped 52.3% year over year in July to a record level of 4.57 million tons. They have had the ability to influence oil prices by controlling production regardless of global demand to meet their own needs.
Oil prices declined sharply on Wednesday after USA government data showed unseasonal growth in commercial crude stockpiles, while traders remained skeptical about a planned OPEC meeting next month.
In April, the talks on a production freeze between Russia, OPEC and other oil producers collapsed after Saudi Arabia demanded rival Iran to be part of the deal. So far, the big producers, especially political rivals Saudi Arabia and Iran, have been unwilling to limit production. This argues against another significant drop in the price of oil. “If prices will fall then that necessity will most likely arise”. “Their interests are converging”.
Oil prices fell overnight after the Energy Information Administration data showed a 1.06 million-barrel increase in us crude inventories in the week ended August 5, pushing total stocks to 523.6 million barrels and 37.7% above the five-year average for the same time last year, said analysts at S&P Global Platts. The cartel has 14 members after adding Gabon in June. The contract rose $1.22, or 2.9 percent, to close at $43.02 per barrel on Monday. Analysts polled by Reuters had expected a 1.0 million-barrel crude draw instead.
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 USA 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.
OPEC produces just under 35% of crude oil globally.
Advertisement
-Bill Spindle contributed to this article.
