Libyan production could be raised to 600,000 barrels per day (bpd) from about 290,000 bpd within a month, further adding to the global crude supply glut.
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Crude futures slumped on Tuesday after the International Energy Agency said global oil demand growth slowed in the third quarter and signal that the market will be oversupplied at least through the first half of 2017. Brent crude lost 1.8 percent at $46.26 a barrel.
“The process of shaving an additional $US4.50 a barrel off of the crude benchmarks could require another couple of weeks”, said Jim Ritterbusch of Chicago-based oil markets consultancy Ritterbusch & Associates.
October WTI (West Texas Intermediate) crude oil futures contracts rose 0.5% and were trading at $45.14 per barrel in electronic trade at 6:20 AM EST on September 14, 2016.
“The oil price has to stay muted for now in order to avoid activation of more shale oil rigs”.
USA gasoline stockpiles fell by 2.39 million barrels last week, the API said Tuesday, according to people familiar with the data. By comparison, Saudi Arabia produced 12.58 million barrels a day.
Oil stockpiles rose to a record high 3.1 billion barrels while the amount of crude that refiners process actually grew at the lowest pace in a decade.
“When will the world oil market return to balance?”
“I am expecting an across-the-board build with a large build in crude oil as imports recover after the tropical storm in the Gulf”, said Dominick Chirichella, senior partner at the Energy Management Institute in NY, who predicted an increase of 6.6 million barrels in the latest week.
“The focus of the market is squarely on supply”, said Evan Lucas, a market strategist at IG Ltd.in Melbourne.
The US Energy Information Administration (EIA) reported Wednesday that stockpiles of distillates, which include diesel and heating oil, increased 4.6 million barrels in the week of September 9.
The Organization of the Petroleum Exporting Countries has also pointed to a larger surplus next year due to new fields in non-member countries.
But the EIA noted that crude inventories fell 559,000 barrels last week, while analysts had been estimating an increase of 3.8 million barrels.
The drop in US output was mostly driven by a decline in shale oil production, which saw investments slump by 66 percent since 2014, consultants Rystad Energy said in a note on Monday.
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OPEC members are due to meet informally in Algeria this month on the sidelines of the International Energy Forum (IEF). Few analysts expect the major producers to reach a deal.
