The cartel forecast that output from outside the group would only contract by 610,000 barrels a day – following an upward revision of 180,000 barrels a day from August, to average 56.32 million barrels a day.
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ENERGY: The price of oil recovered some of its 3 percent overnight drop which followed International Energy Agency remarks about weaker oil demand due to slower global economic activity. This was so, according to the IEA, because “Middle East producers opened the taps”. Production has averaged 10.36 million barrels a day in the first eight months of this year, nearly 200,000 barrels a day higher than the year-earlier period. However, that figure fell to 8.7 million bpd in June this year, according to the U.S.’s Energy Information Administration.
OPEC said on September 12 that it expects a larger surplus in 2017 due to new fields in non-member countries and as USA shale producers prove more resilient than expected to cheap crude. For 2017, the forecast is even smaller at 1.2 million bpd. An increase in exports by these two countries would be a major oil-market development ahead of talks in Algeria at the end of this month among OPEC members to cap output.
“A build to gasoline stocks amid lower runs and lower product supplies counters the bullish theme, as does a strong build to distillates”, said Matthew Smith, analyst at New York-based crude cargo tracker Clipperdata.
Oil prices have halved over the past two years due to a glut of production while global gas prices have made a similar retreat. “Consequently, stocks of oil in OECD countries are swelling to levels never seen before”.
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.
Even so, expectations of United States monetary tightening before the end of the year, along with the bleak demand outlook projected by the IEA, further diminished market optimism that the world’s largest oil producers might agree to freeze output when they meet for talks in Algeria on September 26-28.
The IEA now expects production to outpace demand until at least the first half of 2017.
“Brent and WTI futures duly responded by heading south at a rapid rate of knots, making crude the ugliest horse in the glue factory in a tough week for investors”.
US West Texas Intermediate crude fell $US1.39, or three per cent, to settle at $US44.90.
An attempt to jointly freeze production levels earlier this year failed after Saudi Arabia backed out over Iran’s refusal to take part of the initiative, underscoring the difficulty for political rivals to forge consensus. Producers are expected to meet in Algeria on the sidelines of the September 26-28 International Energy Forum.
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These topics and more will be discussed at the Sustainable Investment Forum, taking place on September 20th 2016 in NY.
