Analysts polled by Reuters had expected a 1.0 million-barrel crude draw instead.
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Hedge funds almost doubled their bets against West Texas Intermediate crude oil over the last month as prices fell from their June highs in the low $50s, according to data compiled by Bloomberg. At first, this was blamed on a production glut, but as concerns about global economic growth set in, this dampened expectations even further.
Oil prices extended earlier gains after the remarks.
But the IEA added that the global oversupply which has haunted oil markets for the last two years has finally disappeared. More demand from refineries helps slash oil inventories, potentially bolstering prices.
“Our balances show essentially no oversupply during the second half of the year”, the IEA wrote.
Oil prices have been falling in morning trading in Europe, after stabilizing overnight. But in remarks reported Thursday, Saudi oil minister Khalid al-Falih said an informal meeting of the Organization of the Petroleum Exporting Countries (OPEC) scheduled for next month would be the occasion for producers to discuss “any possible action”.
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Global markets will continue to rebalance this year as rising refiner demand absorbs growing output from Persian Gulf producers, according to the International Energy Agency.
In the USA, domestic inventories of crude oil and petroleum products rose last week to a record high, government data showed Wednesday.
“According to secondary sources, OPEC-14 crude oil production (following the rejoining of Gabon on 1 July), averaged 33.11 mb/d in July, an increase of 46 tb/d over the previous month”, the report read.
Oil prices stateside fell more than 1% on Wednesday after the second-biggest weekly draw in USA gasoline this summer was counteracted by an unusual growth in crude stockpiles.
Energy analyst, Tariq Zahir, said that at this time of the year, we should be drawing down in crude oil inventories, but instead we are still building up. West Texas Intermediate Futures exchange futures similarly fell 1.3 percent to $41.14 per barrel on the New York Mercantile Exchange.
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But OPEC countries are continuing to produce at peak levels.
