In its latest short-term energy outlook (STEO), released on Tuesday, the U.S. Energy Information Administration (EIA) has raised its forecast for the United States oil production to average 8.73 million barrels per day (bpd) this year and 8.31 million bpd next year, compared to its earlier forecast of 8.61 million bpd for 2016 and 8.2 million bpd for 2017. Saudi Arabia’s oil minister said the country would act to help re-balance the market if needed, Reuters reported.
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According to the U.S. Energy Information Administration, U.S. crude inventories grew by 1.1 million barrels, excluding the Strategic Petroleum Reserve, during the week of August 5 to 523.6 million barrels.
An informal OPEC meeting next month is unlikely to change the situation in the oil market, says Richard Mallinson, a geopolitical analyst at Energy Aspects, an independent research consultancy specializing in global energy markets.
Non-OPEC oil supply is expected to contract by 0.79 million bpd this year the report said, following an upward revision of 90,000 bpd since the previous report, driven by higher-than-expected output in the second quarter in the USA and UK.
As such, and because neither China or the US are likely to alter course, Routt predicts the biggest victims of the glut will be European and Russian refineries, which will be forced to make deep production cuts.
Oil prices fell for a third day in Asia trade today after figures showing high USA crude stockpiles and increased Saudi production. He said oil prices had dropped on Wednesday after Saudi oil production figures showed the country’s output had risen last month to almost 11 million barrels per day.
Distillate: Distillate fuel supplies (including diesel and heating oil) fell by 1.96 million barrels last week, as opposed to analysts’ expectations for an 400,000 barrels rise in inventory level.
At around 1450 GMT, US benchmark West Texas Intermediate futures stood at $42.62, up from $41.55 seen in Asia, and North Sea Brent futures at $45.10 against $43.91 earlier.
Same outlook for September WTI crude which only has its $40.84/b support to keep the price from attempting a move back to the recent lows.
Iran and Iraq have made the biggest gains so far this year, adding 560,000 and 500,000 bpd to their output respectively, after sanctions on both countries were lifted, the IEA said.
While shale drilling in the U.S.is on the rise again, prices need to climb nearer to $60 a barrel for US producers to have a “substantial” boost in activity, the International Energy Agency said.
The Kingdom produced nearly 11mln barrels for the month of July, which contributed to OPEC’s overall output increasing by some 46,000 barrels per day from the preceding month. “The market is clearly concerned about oversupply”, said Tamas Varga, analyst at London brokerage PVM Oil Associates.
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The IEA said Thursday it had cut its oil demand growth forecast for 2017 because of a weaker outlook for the world economy following Britain’s vote to leave the European Union. Refineries processed 16.6 million barrels daily, with gasoline production averaging 10.1 million barrels per day.
