With demand faltering in Asia’s four biggest oil consuming countries, efforts led by OPEC and Russian Federation to cut output by 1.8 million bpd during the first half of the year to rein in a global fuel supply overhang could be undermined, resulting in calls by Saudi Arabia to extend the cuts into the second half of 2017. “Flows of oil from West Africa, the US and North Sea are cost-competitive against Middle Eastern grades as OPEC, non-OPEC compliance to the supply cut has made Middle Eastern barrels more expensive”, said Lee.
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“OPEC’s compliance has been more than anticipated”, an OPEC delegate said: “For non-OPEC, it is satisfactory and getting better”. “The IEA said that global inventories are on the cusp of declining”. We expect OPEC to continue their policy when they meet at the end of May. Long positioning in oil futures reached record-highs in mid-February, with money managers now reportedly holding around 1bn barrels of financial crude contracts.
This is while the USA total motor gasoline imports, including both finished gasoline and gasoline blending components, last week averaged 488,000 barrels per day, according to the report. Brent crude for June delivery traded down about 0.1% at $55.77 a barrel in London. Trading in NY and London will be closed for the Good Friday holiday.
Gasoline supplies fell 2.97 million barrels, while inventories of distillate fuel, a category that includes diesel and heating oil, slipped 2.15 million barrels.
Overall, it trimmed forecasts for global oil demand growth this year by about 100,000 bpd to 1.3 million bpd.
OPEC said its production, including Nigeria and Libya, fell about 150,000 bpd in March to 31.93 million bpd, as Saudi Arabia continued to make a larger cut than called for by the deal.
“We see the weekly inventory and USA production data being an important oil price driver but it conflicts with the OPEC signals”, said Hans van Cleef, senior energy economist at ABN AMRO Bank in Amsterdam.
In the cartel’s monthly report released Wednesday, independent sources reported the group of oil-producing countries has cut output by 1.1 million barrels a day since December. That’s the highest since January 2016.
Production will have grown year-on-year by May, the agency said.
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Crude stockpiles dropped from the highest since the EIA began tracking the data in 1982 – the second decline this year.
