Refiners’ crude processing this quarter, known as throughput, will increase by 600,000 barrels a day from a year earlier to a record 80.6 million a day, according to the agency.
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Traders said that markets were being weighed down by an ongoing supply overhang in crude and refined fuel products, while a suggested meeting by oil producers was unlikely to result in a significant market tightening.
“Some momentum will be lost in 2017 due to downgrades in economic growth projections, but the forecast expansion of 1.2m barrels per day is still above-trend”, it said in its monthly oil market report released today.
At the same time oil oversupply, which has again been weighing on the oil price since June, will disappear in the latter part of 2016, the IEA said.
“As long as oil holds $40.00 we should be at the bottom”, Phil Flynn, senior energy analyst at Price Futures Group said.
After falling for two consecutive trading days, crude oil prices were weaker in the early morning hours on August 11.
However, the IEA said that stockpiles may ease in the coming months, which could act to stabilise prices.
Cash-strapped Venezuela and Nigeria, where oil installations have been the target of militant attacks, have each seen declines of around 150,000 barrels per day compared to 2015, partly offsetting production gains in Iraq and post-sanctions Iran, it said.
The agency trimmed forecasts for world oil demand growth in 2017 by 100,000 barrels a day because of a “dimmer macroeconomic outlook”, projecting that consumption will expand by 1.2 million barrels a day to average 97.5 million a day. West Texas Intermediate crude, the USA benchmark, slumped 0.46 per cent to $41.52.
Saudi Arabia is leading the pack, producing almost 10.5 million barrels per day in July, up 30,000 compared to its output in June.
The upshot, the IEA concludes: “The massive overhang of stocks is.keeping a lid on prices, with both newly produced and stored crude competing for market share in an increasingly volatile refinery margin environment”.
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The clearing out of the glut, for now, comes as the world’s biggest producers keep pumping more. Neighboring Kuwait and the United Arab Emirates also set new records in July. Moving forward, US production is likely to increase further, as producers have adjusted their business models and cost structures to keep pumping oil in a low pricing environment.
