Oil prices fell sharply on Wednesday after data from the U.S. Energy Information Administration EIA/S showed crude inventories rose 1.1 million barrels in the week ended August 5.
Advertisement
If demand is weakening, supply has increased substantially over the course of last month. There were 381 active rigs as of August 5, the highest number since March 18, according to Baker Hughes Inc. data.
“The markets clearly are deriving support from both the IEA report and statements from the Saudi oil minister”, said Andrew Lebow, senior partner at Commodity Research Group in Darien, Connecticut.
The Paris-based think tank lowered its forecast for oil demand growth for next year, saying the rebound in oil prices from their depths at the start of the year had slowed the market’s momentum.
THE QUOTE: “It’s been such an oversupplied market for a long period of time, to get that supply-demand closer to being in balance, or to be in balance, is a huge driver”, said David Chalupnik, head of equities for Nuveen Asset Management.
The EIA (U.S. Energy Information Administration) reported that USA gasoline inventories fell by 2,800,000 barrels to 235.4 MMbbls (million barrels) between July 29 and August 5, 2016.
Before it’s here, it’s on the Bloomberg Terminal. The output from the OPEC, increased by 150,000 barrels per day to 33.4 million barrels/day.
Saudi Arabia would “take any action to help” the crude-oil market and will discuss acting in coordination with other producing countries at a meeting in September, the kingdom’s energy minister said on Thursday.
Both benchmarks soared more than 5 per cent and Brent futures were up US$1.89 at US$45.94 a barrel by 12:43 p.m. EDT (1643 GMT) and USA crude rose US$1.76 to US$43.47.
Saudi Arabia, OPEC’s largest oil producer, pledged during the last OPEC meeting in June that the kingdom would not flood the market with oil.
US crude inventories are now at “historically high levels for this time of year”, the EIA said.
An increase in production from Opec and non-Opec countries drove global oil supply up by 800,000 in July.
At around 1450 GMT, US benchmark West Texas Intermediate futures stood at $42.62, up from $41.55 seen in Asia, and North Sea Brent futures at $45.10 against $43.91 earlier. But that would still lag expected demand growth, eroding some of the product stock cushion built since mid-2015.
Advertisement
The IEA said Thursday it had cut its oil demand growth forecast for 2017 because of a weaker outlook for the world economy following Britain’s vote to leave the European Union.
