Oil edges up but remains near half-year lows as supply overhang weighs
- Author: Zachary Reyes Jun 17, 2017,
Jun 17, 2017, 20:01
Gasoline inventories now sit at 242.4 million barrels, or 9 percent, above the five-year average of 223 million barrels, according to EIA data.
Oil prices pared gains on June 13 after the release of the report to trade towards $48/bbl, below the $60 level that top OPEC producer Saudi Arabia would like to see and less than half the level of mid-2014. On the New York Mercantile Exchange, West Texas Intermediate futures were trading down 0.1% at $44.71 a barrel.
The IEA expects global demand will increase by 1.4m barrels a day next year - up from 1.3m b/d in 2017 - as China and India take total consumption above 100m b/d for the first time in the second half of the year.
Shale oil production is expected to continue growing in the U.S. The number of operating rigs there has increased for 21 straight weeks, according to oil field services company Baker Hughes.
"The outlook for oil hinges on the effectiveness of the Opec cuts relative to the supply increases from United States shale", said William O'Loughlin, analyst at Australia's Rivkin Securities. "Oil production in the USA was. higher (and) oil tanker tracker data also suggests OPEC shipments remain strong", ANZ bank said.
Oil has declined nearly 8 percent this month amid speculation increasing US supplies will offset production curbs by the Organization of Petroleum Exporting Countries and its allies including Russian Federation.
USA crude futures fell by 1% to trade at $45.97 a barrel after the report was released. In May, OPEC and 10 other crude-oil producers agreed to extend the deal to cut output by 1.8 million barrels a month until next March.
"Our first outlook for 2018 makes sobering reading for those producers looking to restrain supply", the IEA said in its monthly oil market report.
USA energy companies added oil rigs for a record 22nd week in a row, energy services company Baker Hughes said on Friday.
OPEC said Tuesday, that output from the group rose by 336,000 barrels per day in May to 32.14m barrels per day.
A day after Opec complained that increased output in the U.S. was slowing efforts to rebalance supply and demand in the oil market, the IEA also suggested that the dynamism of U.S. producers could prove a headache for exporters.