Crude Down In Asia On API Build, China Industrial Data Shrugged Off

Both benchmarks are hovering near levels last reached in late November previous year when production cuts led by the Petroleum Exporting Countries (OPEC) were first announced in an effort to prop up prices. The cuts are aimed at bringing global OECD inventories down to their five-year average.

Supply oil products grew with gasoline inventories, adding 2.1 million barrels and distillates rising by 300,000 barrels last week, proving that demand is really a lot lower. USA crude futures CLc1, meanwhile, were down 3.4 percent to $44.92 a barrel, the lowest intraday level since May 5.

The weakness on the supply side was driven by non-OPEC production which fell by 0.8 Mb/d, its largest decline for nearly 25 years, said the report.

The contract lost 27 cents to US$44.46 yesterday, the lowest since November 14.

USA crude oil inventories fell last week, but an unexpected build in gasoline stocks and weak demand for the motor fuel offset market optimism over the crude drawdown, the Energy Information Administration said on Wednesday.

The IEA predicts non-OPEC production, mainly US supplies, will grow by 1.5 million barrels a day in 2018, while global daily demand will only see a rise of 1.4 million barrels. This suggests global oversupply will persist for a while.

OPEC's pledge was to cut 1.8 million bpd in tandem with other key producers, including Russian Federation, for the first six months of the year.

Ross said surplus oil stocks were being drawn down, "but not at the rate Opec would like to see" because of U.S. production.

With (Other OTC: WWTH - news) regard to the global economic outlook for 2017, stronger-than-anticipated momentum since the beginning of the year led to an upwards revision in the growth forecast to 3.4 percent following growth of 3.1 percent in 2016, OPEC said.

It's a "battle between sheikhs and shale", Dudley said, referring to the frantic efforts by the major oil producing nations of the world in the middle east to prop up crude oil prices, which are under relentless pressure from rising shale oil and gas production in the United States and record stockpiles.

The upward movement on gasoline inventories for another week was also a huge disappointment, climbing 1.794 million barrels this week, compared to an expected draw of 1.15 million barrels.

The IEA expects oil supplies next year to outpace demand despite consumption hitting 100 million bpd for the first time.

  • Leroy Wright