The IEA has speculated higher oil demand for the coming months and scope for expanded supply.
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Oil prices fell on Thursday, heading for a sixth session of declines, following a lower-than-expected draw on US stockpiles and amid worries Britain might leave the European Union (EU). Crude is down more than 5 per cent since hitting 2016 highs of almost $53 a barrel on supply disruptions mostly out of Nigeria and Canada.
The EIA expects the price declines will “more than offset” rising OPEC production and exports this year.
Crude futures fell for a fourth session running on Tuesday (Jun 14) as the International Energy Agency warned that huge stockpiles would cap any future price gains.
Inventories increased 1.16 million barrels last week, the American Petroleum Institute was said to report. Crude stockpiles fell by 933,000 barrels in the week ended Friday and gasoline stockpiles fell by 2.6 million barrels, far beyond estimates of a 200,000-barrel draw, according to the U.S. Energy Information Administration.
The oil market has been heading downward since Friday when Baker Hughes (BHI – Analyst Report) announced that the number of rigs drilling in the United States was up for the second straight week.
“Prices will be choppy in a range over the next several weeks and months, but near the end of the year we do think that prices will take another leg higher”, Michael Tran, commodity strategist at RBC Capital Markets, said by telephone. The production of distillate fuel (fuel and diesel oils) also increased, averaging 5 million barrels per day.
That would lead to a very modest clearing of the glut at the rate of around 100,000 barrels a day.
Markets reacted to Tuesday’s IEA report by pushing prices down to near $48 a barrel for July delivery of West Texas Intermediate (WTI) and down to $49.50 for August-delivered Brent. Prices tumbled last year as OPEC refused to concede market share to a crude surplus triggered by years of booming shale oil output from the U.S.
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But there is plenty of oil flowing into the market with Iran’s exports on track to hit the highest in nearly 4-1/2 years in June, as shipments to Europe recover to near pre-sanctions level, a source with knowledge of the country’s crude lifting plans has told Reuters.
