Oil prices fell Wednesday after an unseasonal growth in crude stockpiles overshadowed the second-biggest weekly draw in USA gasoline this summer. The EIA also reported that US gasoline stocks fell 2.8 million barrels last week, which is the second-largest weekly draw for gasoline since mid-April.
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Average price for Brent oil will be $41.6 per barrel in 2016 and $51.58 per barrel in 2017, according to the U.S. Energy Information Administration’s (EIA) forecasts in the Short-term Energy Outlook August 2016.
North Sea Brent crude dropped by 50 cents to $43.55, while U.S. light crude traded at around $41.15 a barrel, down 56 cents, Reuters reported.
Opec’s report backtracked from earlier predictions supply and demand would rebalance in 2016, saying higher seasonal demand in coming months would contribute to the “expected rebalancing of the market”, without saying when it would occur.
Distillate fuel product supplied averaged over 3.8 million barrels per day over the last four weeks, a 2.4 perncet increase from the same period previous year.
“Talk of production cuts in the oil market saw prices surge overnight”, ANZ bank said on Friday.
A monthly report from the Organization of Petroleum Exporting Countries also showed Saudi Arabian oil production at almost 10.5 million barrels per day in July – a record high, above peak levels seen the same time a year ago. While Brent Crude Oil future did fall to a nadir of $43.5 this morning once the supply glut news rolled in, it has now jumped back up to $43.9 GMT.
It expects the demand growth to a slowdown from 1.4 million barrels per day this year to 1.2 million barrels/day in 2017.
Overall production from the Organization of the Petroleum Exporting Countries (OPEC), of which Saudi Arabia is the de-facto leader, also increased, boosted by producers such as Iraq and Iran, who offset the impact of militant attacks in Nigeria. Analysts polled by Reuters had expected a 1.0 million barrel crude draw.
And oil prices are still more than 12 percent below their last peak in June, as brimming storage tanks and production that exceeds consumption weighs on markets.
The West Texas Intermediate (WTI) benchmark for U.S. crude futures rose $1.20 or 2.8% to close at $44.69 a barrel, the highest level on the New York Mercantile Exchange since July 21.
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The EIA expects USA output to average 8.73 million barrels a day this year and 8.31 million barrels a day next year, up from its prior forecasts of 8.61 million and 8.2 million, respectively.
