“Some momentum will be lost in 2017 due to downgrades in economic growth projections, but the forecast expansion of 1.2m barrels per day is still above-trend”, it said in its monthly oil market report released today. OPEC produces just under 35% of crude oil globally.
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Gasoline production increased to an average of 10.1 million barrels per day last week while distillate fuel production decreased to an average of over 4.7 million barrels per day.
Motor gasoline product supplied over the last four weeks averaged about 9.8 million barrels per day, up by 1.7 perncet year-over-year.
“The resulting product stock draw (fall in stockpiles) will increase refiners’ appetite for crude oil and help pave the way to a sustained tightening of the crude oil balance”.
At the meetings with other major oil producers in April and June 2016, OPEC discussed the possibility of oil output freezing to maintain oil prices.
The remarks helped send prices up more than four percent in NY, where a barrel of West Texas Intermediate for September delivery closed up US$1.78 at US$43.49, after having lost more than a dollar the day before. “The 2016 outlook is unchanged from last month’s Report”, the IEA report said.
Even so, USA gasoline futures settled down more than 3 percent, for its biggest loss in a month.
A hefty draw in stocks in Q3 should begin to reduce the current overhang of supplies, says the IEA.
Adding to renewed worries about a global crude glut, top crude exporter Saudi Arabia told the Organization of the Petroleum Exporting Countries (OPEC) that the kingdom’s output reached a record high of 10.7 million barrels per day in July.
Despite the gains in the rig count, the IEA reiterated its view that shale oil production will decline by half a million barrels a day this year with a further drop of 200,000 barrels a day next year.
London-traded Brent futures are down nearly 15% since peaking at $52.80 in early June, as prospects of increased exports from Middle Eastern and North African producers, such as Iraq, Nigeria and Libya, added to concerns that a glut of oil products will cut demand for crude by refiners.
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Crude oil prices trended lower in the hours before the start of trading in NY, only to turn positive in the opening rounds. OPEC included Gabon, which became its 14th member on July 1, in both June and July production totals.
