“When it comes to the recent price decline, the dynamics of the crude oil market hold the key”.
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Around 1145 GMT, Brent North Sea crude for delivery in October was down a cent at $44.04 a barrel.
Global oil demand is expected to grow by 1.2 million barrels a day next year, down from 1.4 million barrels a day in 2016, the International Energy Agency (IEA) said on Thursday. At the same time, the IEA anticipates that global demand growth will slow to 1.2 million bpd in 2017, as underlying support from low oil prices continues to diminish. Storage tanks worldwide are also almost full with oil products while refiner profits in Singapore have hit two-year lows.
West Texas Intermediate for September delivery lost as much as 61 cents to $41.10 a barrel on the New York Mercantile Exchange before recouping the loss to trade at $41.68 at 10:59 a.m.in London. U.S. Gulf Coast cracking margins were $5.06 per barrel (-$0.03 per barrel month-on-month) with utilization of 87 percent. Analysts had expected a 1.0 million-barrel crude draw instead.
Some see oil prices rebounding, citing Venezuela’s renewed efforts to get OPEC to cooperate with other oil producers on reducing output after a failed effort in April. Crude supplies increased by 1.06 million barrels last week, according to the Energy Information Administration.
The International Energy Agency lowered its forecast for the rise in global oil demand next year on the heels of a lower economic outlook.
In further bullish news, market intelligence firm Genscape reported a draw of about 271,000 barrels at the Cushing, Oklahoma delivery hub for WTI futures in the week to August 9, traders said. Specifically, the IEA said, “Oil’s drop… has put the “glut” back into the headlines even though our balances show essentially no oversupply during the second half of the year”. Tehran ruled out any production cuts at the time, aiming to produce a pre-sanction level of four million bpd.
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Overall production from the Organization of the Petroleum Exporting Countries (OPEC), of which Saudi Arabia is the de-facto leader, also increased, boosted by producers such as Iraq and Iran, who offset the impact of militant attacks in Nigeria.
