Non-OPEC supply rose by nearly 550,000 barrels per day in July, largely driven by production recovery in Canada, which had been disrupted by a wildfire earlier in the year. Analysts polled by Reuters had expected a 1.0 million barrel crude draw.
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An increase in Saudi Arabia’s output to a record 10.67 million bpd in July was due to seasonal demand during summer and in part to meet higher demand from customers, the Saudi oil minister said.
In Singapore, oil refining profits dropped to two-year lows on Wednesday, in the latest sign that the industry is pumping too much fuel for the market to absorb.
The IEA further said the demand for oil will reach 97.5 m/bpd next year after 96.3 m/bpd this year.
“This recovery in oil prices has been a welcome respite to those U.S. shale producers who Saudi Arabia chose to take on when they allowed prices to fall below $70 a barrel in 2014, and prompted the run down to $27 a barrel”.
For 2017, global oil demand is expected to grow at the same level anticipated last month; that is, going up by 1.15 mb/d from 2016 levels.
Brent crude futures slid by 80 cents, or 1.8 per cent, to $44.18 per barrel.
“Oil eased lower as another round of proposed production freeze talks by OPEC failed to excite investors”, ANZ Bank said.
Prices continued to fall in July because of concerns about high levels of US and global petroleum product inventories, despite relatively strong demand and because of growing USA oil rig counts, according to EIA.
“Russia has shrugged off lower prices, worldwide sanctions and financing difficulties to become non-OPEC’s largest source of supply growth”, the report reads.
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In London, North Sea Brent for October delivery fell 93 USA cents to US$44.05 on the Intercontinental Exchange. The Paris-based IEA predicted that global production will fall behind demand by almost one million barrels per day in the July-September period. OPEC produces just under 35% of crude oil globally. In North and South America alone, crude production is projected to fall by 700,000 barrels a day in the third quarter of 2016, compared with the first quarter.
