“The resulting product stock draw will increase refiner’s appetite for crude oil and help pave the way to a sustained tightening of the crude oil balance”.
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Oil prices fell on Thursday as a build in USA crude inventories and record Saudi Arabian production reinforced fears of a large global supply overhang.
The International Energy Agency says global markets have absorbed the excess oil that has weighed on crude prices for two years, but now oil demand growth, one pillar supporting prices, is in decline. It defied skeptics with a 25 percent surge in production so far in 2016 and aims to reach an eight-year high for daily output of 4 million barrels by the end of the year.
In its Monthly Oil Market Report that came out on Wednesday, OPEC said that now its latest estimates peg the total oil demand at 94.26 mb/d.
Many remain skeptical that anything related to price stabilization will happen, as they expect a repeat of the meeting back in April in Doha when talks fell through after Saudi Arabia backed out, citing Iran’s refusal to join in a so-called production freeze. Brent crude, which is the worldwide benchmark, rose above $52 a barrel in June, but fell more than 14% as stockpiles rose along with concerns about the demand outlook.
The Paris-based agency, which consults oil-importing nations, lowered its forecast for demand growth next year to 1.2 million barrels a day from 1.3 million barrels a day previously.
Around 1100 GMT, US benchmark West Texas Intermediate for delivery in September was down six cents at $43.43 per barrel. Brent crude was up more than 3 percent at $45.50 a barrel.
US refined products futures, including gasoline RBc1 and distillates, jumped after Motiva Enterprises LLC’s 235,000 barrel per day Convent, Louisiana, refinery was evacuated due to a fire around midday on Thursday. October Brent crude LCOV6, -0.50% on London’s ICE Futures exchange fell $0.22, or 0.5%, to $43.83 a barrel.
“Khalid al-Falih hinted at possible cooperation between Opec and non-Opec countries to curb production”, said Alex Furber, an analyst with CMC Markets.
“Despite signals pointing to a potentially enormous bulge in crude stocks for 2017, there appears to be no taming of the oil market bull when Opec speaks”, he said in an email commentary.
The members of the Organisation of Petroleum Exporting Countries (OPEC) are expected to meet on the sidelines of the International Energy Forum (IEF) in Algeria, this September.
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In June, Saudi Arabia had said it would not increase output, during the last OPEC meeting, showing a concern that oil prices could go back down amid oversupply.
