Crude oil prices eased down to the $45 per barrel mark in August, as the report alluded to, but today WTI crude prices have fallen further down to 41.50 per barrel, as the United States Energy Information Administration confirmed that there had been a build up in crude inventories.
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The statement indicates Riyadh is anxious that oil prices could be heading back towards $40 per barrel or lower due to fears of oversupply.
While gasoline supplies and U.S. domestic production have fallen, analysts warn that global production levels are far outstripping demand.
Benchmarks ended in the red on Wednesday following a decline in crude prices after the EIA reported an increase in USA crude inventories last week.
The IEA, which advises large developed economies on energy policy, predicted oil stocks would draw in the third quarter of this year for the first time in more than two years. “The Gulf nations have seen their petrodollar revenues collapse, and one way to revive cash flow is simply to produce more oil”. The 2017 forecast – though still above-trend – is 0.1 mb/d below our previous expectations due to a dimmer macroeconomic outlook.
In its monthly oil market report, the IEA said it lowered its forecast for demand growth for next year by 100,000 barrels per day, to 1.2 million bpd, which would represent a slowdown from this year’s forecast growth of 1.4 million bpd.
Saudi Arabia told OPEC that it pumped a record 10.67 million barrels of oil a day in July up 123,000 barrels per day.
Saudi Energy Minister Khalid al-Falih said OPEC members and non-members would discuss the market situation, including any action that may be required to stabilize prices, during an informal meeting on September 26-28 in Algeria.
IEA said that increasing demand should help control stocks later this year. Crude output dropped for a second week and gasoline inventories slid by 2.8 million barrels to 235.4 million. OPEC report has also taken its toll that showed record oil production of 10.67 million barrels by Saudi Arabia. Crude dropped 2.2% on Wednesday, after Crude Oil Inventories, often a market-mover of USA crude, showed a surplus of 1.1 million last week, surprising the markets, which had anticipated a decline of 1.3 million.
Crude oil prices swooned after EIA inventories data showed stockpiles unexpectedly grew by 1.06 million barrels last week, clashing with forecasts calling for a drawdown of 1.5 million barrels.
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Some OPEC officials had said a revival of talks on a global oil production freeze could be discussed informally among OPEC and non-OPEC countries in Algeria if oil prices weakened.
