Oil fell sharply after data from the US Energy Information Administration showed crude inventories rose 1.1-million barrels in the week to August 5. The chart below shows the current status of USA crude oil inventories.
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The surge in oil prices (and good results from leading United States retailers) saw Wall Street rise, helped the futures market on the ASX200 to a 33 point gain, and left the Aussie dollar around 77 USA cents this morning.
“Even though OPEC production is going to go up, we’re still going to be growing demand”, said Phil Flynn, senior market analyst at Price Futures Group in Chicago.
Oil prices continued to fall on Wednesday, driven in part by elevated USA crude inventories and Saudi Arabia s record oil production.
Two factors have caused the glut to disappear: Deep output cuts by producers outside the Organization of the Petroleum Exporting Countries cartel, and healthy global demand for crude oil, the IEA said.
“The failure to follow through on bear market closes suggest we are near the low”.
International Brent crude futures LCOc1 were at $45.01 per barrel, up 2 cents.
On Wednesday, OPEC left its 2017 demand outlook unchanged at 95.41 million barrels per day, though that is still up from this year’s forecast of 94.26 million barrels per day.
Plus, on August 11, 2016, the IEA (International Energy Agency) stated that crude oil output would fall short of demand by 1 million barrels per day in July and September.
On the demand side, the IEA said it expected a slowdown from 1.4 million barrels per day in 2016 to 1.2 million bpd in 2017.
Analysts mostly expected no impact on actual supplies from talk of a potential producer meeting to discuss propping up prices.
Prices for both crude grades posted declines of more than 2% Wednesday, with losses triggered by a weekly rise USA crude inventories and that daily record output by Saudi Arabia.
Global oil prices declined nearly 15 percent in July over concerns oversupply of crude and finished products would delay the rebalancing of the market.
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Saudi Arabia ramped up to a record rate of 10.62 million barrels a day, while Iraqi crude production rose by 80,000 to 4.33 million barrels a day.
