A recent outlook published by the International Energy Agency (IEA) said that the supply and demand balance, are expected to tighten towards the end of this year.
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A monthly report from the Organization of Petroleum Exporting Countries showed Saudi Arabian oil production at almost 10.5 million barrels per day in July.
Markets were supported as Saudi Arabia’s energy minister Khalid al-Falih said in a statement late on Thursday that oil producers would discuss during a meeting next month in Algeria potential action to stabilize oil prices.
Despite low oil prices, the growth in crude production is continuing unabated.
Distillate stockpiles fell 1.96 million barrels, surprising on the upside as analysts had expected a rise of 167,000 barrels.
Saudi Arabia, OPEC’s largest producer, pumped an all-time record high 10.7 million barrels per day in July. Kuwait and the United Arab Emirates also set records in July.
In addition, lower-than-anticipated demand, high refined-product inventories, and growing crude supply led to the first decline of the OPEC Reference Basket in five months.
The IEA, in its monthly report, forecast a healthy draw in global oil stocks in the next few months that would help ease a glut that has persisted since 2014 on the back of rising OPEC and non-OPEC supply.
On the New York Mercantile Exchange, West Texas Intermediate futures were trading down 1.3 per cent at $41.14 a barrel. Crude processing, or throughput, sank by 480,000 a day between April and June amid a glut of fuels like gasoline churned out earlier in the year while refiners took advantage of cheap oil prices. For instance, the Organization for Economic Cooperation and Development, a group of countries with advanced industrial economies, crude-oil inventories rose to a record 3.09 billion barrels in June, the agency said.
This represents a cut of 100,000 bpd from the IEA’s forecast last month.
International Brent crude futures LCOc1 were at $45.01 per barrel, up 2 cents.
The demand outlook for OPEC crude for this and next year remained unchanged in August from the previous report at 31.9 million bpd and 33 million bpd, respectively. Brent crude had risen to near $US52 in July, but fell back below $US40 as concerns about bloated gasoline supplies in the USA, and rising oil rig use in the US.
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“Oil traders were spurred into action” by the comments, said Bernard Aw, market strategist at IG Markets Singapore.
