“The resulting product stock draw (fall in stockpiles) will increase refiners’ appetite for crude oil and help pave the way to a sustained tightening of the crude oil balance”.
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The IEA predicted “a hefty draw” on oil reserves in the current quarter after a stretch of uninterrupted builds.
The US crude surplus now measures some 523.6mln barrels.
“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.
The agency now expects USA oil output to fall by 700,000 barrels per day this year to 8.73 million bpd, compared with the 820,000-barrels per day drop it previously forecast.
Still, the overall takeaway from the IEA’s report has been more bullish than bearish. Analysts at brokerage Bernstein said in a note they expect high inventories, especially of refined fuel, to spur further refinery run cuts in the next few months.
Oil’s recovery from 12-year lows reached in January faltered in early June as inventories of both crude and refined fuels remained bloated, demand growth weakened and USA oil explorers began to resume drilling.
Average price for Brent oil will be $41.6 per barrel in 2016 and $51.58 per barrel in 2017, according to the U.S. Energy Information Administration’s (EIA) forecasts in the Short-term Energy Outlook August 2016.
Oil prices had entered a “bear” market last week on oversupply concerns, falling more than 20 percent and closing below $40 a barrel for the first time since April.
Shale producers and others outside the Organization of the Petroleum Exporting Countries have scaled back output, easing the glut, along with outages from Canada, Nigeria and Libya.
The oil cartel produced just over 33.1 million barrels of oil per day in July, up 46,400 barrels compared to June, it said in a new report released Wednesday.
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While shale drilling in the U.S.is on the rise again, prices need to climb nearer to $60 a barrel for USA producers to have a “substantial” boost in activity, the International Energy Agency said.
