This was the first monthly decrease since the Brent price fell to a 12-year low of $31 a barrel in January 2016.
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There are “lingering concerns” that US and European refiners may reduce processing rates as profits fade amid a continuing “overhang” of crude and refined fuels, the Organization of Petroleum Exporting Countries said in its monthly report.
The EIA says USA drivers will pay about 44 cents less per gallon for gas this summer than last summer. “Also, the Saudis are processing more crude this year at refineries as they want to grow in the products market”, analyst Anas al-Hajji told Bloomberg.
The lower than expected decline in USA crude oil production is the result of consistent growth in the US oil rig counts in the past couple of months. World oil demand growth in 2016 now stands at 1.22 mb/d after a slight upward revision of 30 tb/d due to better-than-expected performances from OECD Europe and Other Asia in 1Q16 and 2Q16.
OPEC will hold informal talks at a conference in Algiers next month, as members constantly discuss ways to stabilize the market, Mohammed Al Sada, Qatar’s energy minister and holder of OPEC’s rotating presidency, said August 8.
Oil prices are trading lower on bearish news from the American Petroleum Institute, which reported a large surprise build of 2M barrels in crude stocks.
Brent crude futures LCOc1 slid by 80 cents, or 1.8 percent, to $44.18 per barrel.
Sada, who hosted the Doha summit and is serving as OPEC president through this year, had said in the aftermath of that meeting’s collapse that improving market fundamentals made any production freeze agreement unnecessary.
US gasoline futures rose almost 1 per cent, extending gains, after the EIA also reported a larger-than-expected gasoline drawdown of 2.8 million barrel, but last reversed gains and was trading at down almost 1 per cent.
Production from Saudi Arabia, the group’s biggest member, was mostly stable at 10.477 million barrels a day in July, according to the external sources.
Oil declined after a government report showed US crude inventories increased on weakening demand from refineries.
On Tuesday, the EIA said in its monthly report that US production will fall by 700,000 barrels per day this year as drilling heats up vs. a prior outlook for 820,000 barrels per day.
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EIA noted that significant outages in global oil supply contributed to rising oil prices during the second quarter of 2016. World oil demand next year will increase by about 1.15 million barrels a day, down from 2016’s 1.22 million barrels a day, OPEC said in a report on Wednesday. The country has not expressed a readiness to talk about an output freeze.
