Crude fell today after the International Energy Agency cut its forecast for oil demand in 2017.
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The weekly U.S. government report revealed a build in United States crude inventories on Wednesday.
Crude oil prices extended their decline in early Asian trade on Thursday amid the expected growth in OPEC’s production.
“Cheap crude has led refiners to produce more refined products worldwide, adding to the oversupplied market”, Opec said in the report.
US West Texas Intermediate (WTI) crude oil futures were trading at $42.43 per barrel at 0657 GMT, down 34 cents from their last settlement, or 0.79 per cent. The country’s crude production fell to 2.1 million barrels a day in July, its lowest since 2003, according to the OPEC report. It also boosted estimates for supplies from outside the Organization of Petroleum Exporting Countries by 200,000 bpd as Kazakhstan starts its long-delayed Kashagan project.
With that being said, there’s plainly no relief in predictions from the International Energy Agency which sees oil demand growing by only 1.2mln barrels per day next year.
“The 2017 forecast, though still above-trend, is 100,000 bpd below our previous expectations due to a dimmer macroeconomic outlook”, it said in its monthly market report.
“The crude supply overhang is going to keep the price from rallying too strongly”, David Lennox, a resources analyst at Fat Prophets in Sydney, told Bloomberg News. In 2017, non-OPEC supply is expected to decline by 0.15 mln barrels daily, following a downward revision of 40,000 barrels a day.
“Oil prices are tentatively extending yesterday?s gains as the prospect of a coordinated oil production cut continues to underpin the energy complex”, PVM oil brokers said in a note to clients.
Further data revealed a 2.807 million barrel decrease in gasoline inventories, compared to the 3.262 million barrel plunge seen the previous week, and against projections of a 1.000 million barrel fall.
However, the IEA said that stockpiles may ease in the coming months, which could act to stabilise prices. “Crude prices have been rising, so there may be no deal at OPEC”, Kaname Gokon at brokerage Okato Shoji in Tokyo.
Consumption will pick up in the Northern Hemisphere as winter approaches, reversing some of the discount on oil prices for immediate delivery and whittling away the excess in inventories, OPEC forecast.
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Output from OPEC’s 14 nations roses 150,000 bpd last month to an eight-year peak of 33.39 MMbpd.
