The story was not any different for the global benchmark for crude oil prices, Brent, with the front-month futures contract trading down by 77 bps at $39.80 per barrel, breaking the $40 per barrel psychological level once again.
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Iraqi production increased by 247,500 barrels a day to 4.3 million a day last month, according to external sources cited by the report, which didn’t give a reason for the gain.
Supply outside OPEC is expected to decline by 380,000 barrels per day (bpd) in 2016, the report said, as output falls in regions such as the United States and former Soviet Union.
“It’s a big surprise draw with total combined stocks of crude oil and refined products lower on the week”, said Dominic Chirichella, senior partner at the Energy Management Institute in NY.
The EIA estimated that global oil inventories increased by 1.3 million barrels per day last month amid an ongoing supply glut that’s depressed prices.
Despite the fall in USA inventories, the oversupply concerns remain as the Organization of the Petroleum Exporting Countries (OPEC) could not reach an agreement on production cuts.
The group has been pumping near record levels since past year in an attempt to drive higher-cost producers such as US shale firms out of the market.
Seventeen of 30 analysts and traders, or 57 per cent, were bearish on WTI in a Bloomberg survey Thursday.
The decision effectively leaves it up to individual members how much crude to pump and was a strong signal of OPEC’s eroding ability to act as a group in efforts to influence supply, demand – and prices.
While there is possibility of oil price dropping to US$20 per barrel, an economist from MIDF Research said such a level was unlikely and it would instantly rebound after touching it. The recent price brings its past 5-day performance at -14.13 percent and trades at an average volume of 1.34M shares.
World oil demand is anticipated to have risen 1.53 million barrels per day in 2015 to average 92.88 million, it said.
The market quickly become oversupplied with the new flood of oil from tight plays, and China-which normally consumes staggering amounts of oil-actually declined. Gasoline rose after inventories of the fuel climbed a smaller-than-projected 786,000 barrels.
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But drillers around the world – and particularly in the United States – have slashed capital spending in order to offset declining revenues, creating the expectation that new production will not keep pace with declining output in existing wells.
