The International Energy Agency (IEA), which advises oil-consuming countries on their energy policies, said a sharp slowdown in oil demand growth, coupled with ballooning inventories and rising supply, means the market will be oversupplied at least through the first half of 2017.
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“When will the world oil market return to balance?”
The EIA data which now contradicts the figures released by the API yesterday, who had earlier anticipated a more positive outcome than most market analysts had expected. And it helps limit the trade deficit in the United States, which remains a major net importer of crude oil.
The November contract for Brent, the global benchmark, was up 0.26% at $45.97 while its USA counterpart West Texas Intermediate was down 0.02% at $43.57 for October deliveries of light, sweet crude.
Supplies at Cushing, Oklahoma, the key delivery point for NYMEX crude, fell by 1.245 million barrels last week, the EIA said.
The IEA report published on Tuesday tallied with a gloomy forecast by the Opec oil cartel about the prospects for demand over the next year, sending oil prices down to $47 (£35) a barrel. The global benchmark was at a $1.61 premium to WTI for November. Consequently, Libyan production could be raised to 600,000 barrels per day from about 290,000 bpd within a month, further adding to the global crude oversupply.
USA equities rose after the dollar gave back early gains on weak US retail sales and factory data that dampened the likelihood of a Federal Reserve rate hike this month.
Saudi Arabia’s crude supply dipped to 10.6 million barrels per day in August, down slightly from 10.65 million bpd in July, according to Bloomberg. Nationwide crude stockpiles remain more than 100 million barrels above the five-year average, government data show.
“Exports will resume immediately from Zueitina and Ras Lanuf, and will continue at Brega. exports will resume from Es Sider as soon as possible”, NOC Chairman Mustafa Sanalla said. “That was a pretty negative report”, said Bob Yawger, director of the futures division at Mizuho Securities USA Inc.
The move is the latest in a series of initiatives to reopen the ports that in December 2014 were placed under force majeure, a legal term allowing producers to walk away from contractual commitments.
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EY oil and gas analyst Sanjeev Gupta said a meeting of OPEC and Russian Federation in Algeria later this month, and further developments in Libya will be key influences on prices.
