In its same report, the IEA cut its forecast for growth in global oil demand next year by 100,000 barrels a day to 1.2 million barrels, citing a dimmer economic outlook after the U.K.’s surprise vote to leave the European Union. Comments from Saudi Arabia’s oil minister raised the possibility that major crude producers will take action to stabilize the market at a meeting next month.
Advertisement
“The massive overhang of stocks is also keeping a lid on prices, with both newly produced and stored crude competing for market share in an increasingly volatile refinery margin environment”, the IEA said.
The comments by Khalid al-Falih, named energy minister in May, come as several nations in the Organization of the Petroleum Exporting Countries push for a revival of limits on oil production.
The agency also said that oil markets are balancing and that demand started outpacing production in July by almost 1 million barrels a day.
Futures yesterday rose US$1.78 to settle at US$43.49.
The U.S. Energy Department’s weekly inventory release showed that crude stockpiles recorded a surprise build. Worryingly, supplies at the Cushing, OK storage hub jumped, too.
NYMEX September ULSD settled 6.65 cents higher at $1.3849/gal. NYMEX September RBOB settled up 6.03 cents at $1.3617/gal.
This week, OPEC announced the 14-member bloc will meet on the sidelines of an energy conference next month in Algeria and that the group will “continue to monitor development closely”, adding that it is in “constant deliberation” on way to help restore stability and order in the oil market. Earlier media reported that OPEC may hold an informal meeting at the worldwide energy forum in September and once again discuss the possibility of freezing the level of oil production.
A higher oil price is needed to stabilize the market, Venezuelan President Nicolas Maduro said on state television.
The issues seemingly behind Thursday’s rally “stretched the imagination” whether they were indeed bullish, according to Robert Yawger, director of the futures division at Mizuho Securities USA.
“In a crude market that has seen a combined increase of 200,000 gross short speculative positions over just the past six weeks, any talk of a potential coordinated effort from producers, no matter how unlikely the prospect, will lead to short covering”.
Escalating tension between Ukraine and Russian Federation was also supportive, he said. The settlement was the highest since July 22, according to FactSet data.
Advertisement
As for current oil prices, they lately saw a slight decrease.
