Oil prices dipped on Wednesday as a global supply overhang weighed on markets, while talk of a potential producer meeting to discuss propping up prices lent some support but was met with scepticism by analysts.
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A day earlier, Brent prices lost 93 cents, or 2.07%, after data showed that Saudi Arabia boosted its output to a record high in July, adding to worries over a global supply glut.
The IEA said it was basing its projections on the International Monetary Fund’s decision in July to cut its world economic growth forecast following Britain’s vote to leave the European Union the previous month.
“We do feel that any further strength in the spot price will be met with selling”, said Tariq Zahir, trader in crude oil spreads at Tyche Capital Advisors in NY.
At the same time oil oversupply, which has been weighing on the oil price in recent months, will disappear in the latter part of 2016, the IEA said.
Futures increased 0.2 per cent in NY, bringing the weekly gain to 4.3 per cent. Talks with oil producers in Algiers next month could include action to stabilize the market, Saudi Arabia’s energy minister said, according to Reuters.
Saudi Arabia pumped 10.67 million barrels per day of crude in July, according to figures it provided to OPEC.
Even with this slow in swelling, the fight for the lion’s share of the market among the world’s biggest oil producing countries continues to press on, pushing OPEC member output, of course, to push output.
Over the last four weeks, crude oil imports averaged over 8.4 million barrels per day, an 11.5 percent year-over-year increase, the agency said.
“Oil eased lower as another round of proposed production freeze talks by OPEC failed to excite investors”.
“As long as oil holds $40.00 we should be at the bottom”, Phil Flynn, senior energy analyst at Price Futures Group said.
Oil prices fell early on Thursday as a build in United States crude inventories and record Saudi Arabian production weighed on markets.
In physical oil markets, Iran set its September official selling price for light crude to Asia at a discount of $0.85 per barrel versus benchmark Oman/Dubai prices.
On Wednesday, OPEC left its 2017 demand outlook unchanged at 95.41 million barrels per day, though that is still up from this year’s forecast of 94.26 million barrels per day.
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The International Energy Agency projected Thursday that global refinery processing would increase by 2.2 million barrels per day to 80.6 million, an all-time high. The price for Brent crude oil was up 0.6 percent to start the day at $44.31 per barrel.
