“According to secondary sources, total OPEC crude oil production in January averaged 32.33 mb/d, an increase of 131 tb/d over the previous month”, OPEC said in its oil market report released on Wednesday.
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The IEA said global oil stocks were likely to build by 2m barrels a day in the first quarter of 2016 and 1.5m barrels a day in the second quarter, with stocks continuing to rise in the second half of the year. It said: “If these numbers end up being precise, and together with the marketplace already awash in oil, it’s quite hard to find out how petroleum costs can increase significantly in the short term”.
At around 0300 GMT, US benchmark West Texas Intermediate (WTI) for March delivery was up 54 cents, or 1.93 per cent, at US$28.48 and Brent crude for April climbed 72 cents, or 2.37 per cent, to $31.04. Another driver of the recent bullishness in the crude market has been the view that that low oil prices will boost growth in demand.
Oil prices have fallen nearly 75 per cent since mid-2014 as producers pump 1-2 million barrels of crude every day in excess of demand, just as China’s economy grows at its lowest rate in a generation.
USA oil price retreated Wednesday as data showed the oil production of the country fell less-than-expected. “In these conditions the short-term risk to the downside has increased”, the IEA said.
The American Petroleum Institute (API), an industry group, reported a build of 2.4 million barrels in USA crude stockpiles for last week.
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Overnight, U.S. crude inched down on Wednesday, remaining near 12-year lows, as investors reacted to an unexpected draw in U.S. crude inventories last week and continued speculation that a host of major global producers could cut output in order to stem the prolonged downturn in oil prices worldwide. It predicts that, after hitting a five-year high in 2015, oil demand growth will “ease back considerably” in 2016. Iran raised production in January following the removal of global sanctions, Iraqi volumes reached a record and Saudi Arabia also ramped up output. It predicted the world will store unwanted oil for most of 2016 as declines in USA oil output take time. But the IEA said that “the likelihood of coordinated cuts is very low”.
