On Monday, OPEC announced that its members will be meeting informally to discuss future outlook due to the recent drop in oil prices on the sideline of the International Energy Agency’s (IEA) biennial meeting in Algeria.
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Saudi’s strategy of maintaining their oil output at record levels has also been impacting crude oil prices.
They added 1.1m barrels in the seven days to 5 August, compared to analysts’ expectations for a 1m barrel draw. The report says: “Global oil supply rose by about 0.8 mb/d in July, as both OPEC and non-OPEC production increased”.
Meanwhile, output by Saudi Arabia, the world’s largest exporter of oil, reached a high last month, as part of a broader ramp-up by the Organization of the Petroleum Exporting Countries, according to OPEC data published Wednesday.
Oil prices fell after the second-biggest weekly draw in U.S. gasoline this summer was countered by an unseasonable growth in crude stockpiles.
West Texas Intermediate for September delivery lost as much as 43 United States cents to US$41.28 a barrel on the New York Mercantile Exchange and was at US$41.45 at 8:21 am in London.
Globally, West Texas Intermediate (WTI) crude oil for September delivery fell 19 cents to Dollars 41.52 a barrel, while Brent crude for October eased by 17 cents to USD 43.88 per barrel on the New York Mercantile Exchange.
Oil prices entered a “bear” market last week, having fallen more than 20 per cent from peak levels above Dollars 50 a barrel seen in early June, and closing below USD 40 for the first time since April.
“The resulting product stock draw will increase refiners’ appetite for crude oil and help pave the way to a sustained tightening of the crude oil balance”, the IEA added.
International Brent crude futures LCOc1 were at $43.72 a barrel, down 33 cents, or 0.8 percent.
World oil output has been well above consumption over the last two years, pushing up stocks across the globe at a time when sluggish economic growth has kept a lid on fuel demand.
The renewed production freeze talks are very vital in an oversupplied environment to provide fundamental support to prices. “(…) This was then followed by a rebound that took prices nearly all the way back to the starting point, only to fall again”, OPEC’s Monthly Oil Market Report (MOMR) reads.
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Nymex reformulated gasoline blendstock-the benchmark gasoline contract-fell 1.3% to $1.28 a gallon.
