Global production of crude oil will fall behind demand in the third quarter of this year as the current oversupply that has fueled the oil price slump clears out, according to the International Energy Agency.
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Oil prices entered a “bear” market last week, having fallen more than 20 percent from peak levels above $50 a barrel seen in early June.
Brent crude oil prices rallied back above $46 this morning, after yesterday’s hint by the Saudis that they might take further action to stabilise oil prices.
West Texas Intermediate for September delivery increased as much as 15 cents to $43.64 a barrel on the New York Mercantile Exchange and was at $43.60 at 7:21 a.m. Tokyo time. USA light crude CLc1 traded around $41.71 a barrel, unchanged from the previous close, after falling sharply on Wednesday.
“The market could be spooked by the idea that crude inventories may hit new all-time highs yet again, nullifying the notion of a market that was approaching balance and potentially a deficit in the near future”, he said.
Oil prices fell for a third day in Asia trade on Thursday after figures showing high U.S. crude stockpiles and increased Saudi production. Total production in the United States, including crude and other forms, is expected to drop to an average of 13.6 million barrels a day this year, a drop of nearly 3% compared to 2015, according to the report.
The forecast for 2017 – although still above trend – was cut by 0.1 million bpd from last month’s report following a revision to the global economic outlook by the International Monetary Fund after Britain voted in June to leave the European Union.
In London, North Sea Brent for October delivery fell 93 cents to $44.05 on the Intercontinental Exchange.
And with increasing OPEC production-in combination with the most recent U.S. data-it remains obvious that the global oil market remains oversupplied.
That is close to OPEC’s production of 33.39 million bpd in July when output from Saudi Arabia, Kuwait and the United Arab Emirates reached record levels, pushing total OPEC supply to an eight-year high.
This comes as OPEC member Venezuela tries to drum up support for a producer meeting to decide measures that would buoy oil prices.
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Global supply of oil rose by 800,000 bpd in July, with output from nations in the Opec oil producers’ cartel rising sharply. This is lower than last month’s forecast by 100,000 barrels a day and down 200,000 barrels a day from this time past year.
