The U.S. shale industry may have shaken up Organization of the Petroleum Exporting Countries (OPEC) members and proven to be more resilient than assumed when the members scrambled to regain market share – but as far as the International Energy Agency is concerned, its latest report demonstrates that the cartel is winning the market share war.
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Futures gained as much as 1.5 per cent in NY, paring Wednesday’s 4.4 per cent slump.
Crude oil production, which has steadily fallen in recent months, increased by 50,000 barrels per day last week.
Credit Suisse raised its 2016 oil price forecasts on Wednesday.
In mid-summer 2016, although market balance is upon us, the existence of very high oil stocks is a threat to the recent stability of oil prices: in 1Q16 refinery runs growth was 60% higher than refined product demand growth.
“It’s bearish for oil if stockpiles gain because seasonally speaking, inventories tend to decline at least until mid-August”, Hong Sung Ki, a commodities analyst at Samsung Futures Inc., said in Seoul.
Crude rose Thursday as U.S. stocks extended gains at an all-time high amid corporate results that pointed to resilience in the global economy.
USA benchmark West Texas Intermediate for delivery in August was down 18 cents, or 0.39 percent, to $45.40 and Brent crude for September eased 16 cents, or 0.34 percent, to $47.21 a barrel at around 0310 GMT. Total volume traded was about 46 per cent below the 100-day average.
Brent for September settlement gained as much as $1.16, or 2.5 percent, to $47.42 a barrel on the London-based ICE Futures Europe exchange.
The result? Crude oil prices are down sharply during midday trading today, with WTI down almost 4 percent and Brent off by more than that amount.
US West Texas Intermediate (WTI) futures were down 18c at $45.50 a barrel having earlier fallen to $45.05.
The IEA, which advises industrialized nations on energy policies, said crude inventories kept rising last month and pushed floating storage to the highest level in seven years.
Oil was also supported by the dollar’s drop against the pound after the Bank of England’s surprise decision not to cut rates.
Crude oil production for last month averaged 8.6 million bpd, which is 200,000bpd below the May level, and nearly 1.1 million bpd below the 9.7 million bpd level reached in April a year ago.
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In the U.S., crude production retreated by 220,000 barrels a day to 8.9 million a day in April, the biggest drop since 2008 as the two-year price slump depressed investment and drilling activity, the IEA said.
