Crude drifts a tad weaker in Asia ahead of USA rig count
- Author: Zachary Reyes Jun 19, 2017,
Jun 19, 2017, 16:17
In its first forecast for 2018, the International Energy Agency said Wednesday it expected countries outside the cartel to increase production by about 1.5 million barrels per day, outstripping the growth in global demand.
Summer boosts gasoline demand from U.S. drivers, yet gasoline inventories rose 2.1 million barrels last week, 9 percent over the five-year average for this time of year, according to the U.S. Energy Information Administration (EIA). Adding to the glut is an ongoing rise in USA production driven by shale drillers, which has pushed US output up by 10 percent over the past year to 9.3 million bpd, not far off top exporter Saudi Arabia.
Crude inventories USOILC=ECI fell 1.7 million barrels in the week to June 9, compared with analysts' expectations for a decrease of 2.7 million barrels, as imports USOICI=ECI fell 481,000 barrels per day.
Brent crude, the global oil benchmark, fell 0.74% to $48.36 a barrel on London's ICE Futures exchange.
Crude prices have fallen around 13% since OPEC reached an agreement to extend its 1.2 million barrels per day in production cuts - which, when combined with commitment from non-members such as Russian Federation can reach 1.8 million barrels per day - into the first quarter of 2018.
Oil prices edged up from 2017 lows on Friday but an ongoing supply excess put them on track for their fourth consecutive week of losses despite OPEC-led production cuts to support the crude market.
The International Energy Agency is forecasting US crude and condensates production to increase by 620,000 bpd in 2017, compared with a prediction that output would be flat in its November assessment. Last time the price of oil fell, the stock markets fell with it.
OPEC and 10 other countries led by Russian Federation agreed last week to extend for nine months, to March, a production cut of 1.8 million barrels a day initially agreed on in November.
Yet crude prices have fallen about 12 percent since that day.
Futures were little changed in NY, down 3.1 per cent for a fourth weekly decline.
Under the deal to support the market, OPEC is curbing output by about 1.2 million bpd while Russian Federation and other non-OPEC producers are cutting half as much.
OPEC and its non-OPEC allies are unlikely to remain impassive as USA shale producers and other non-OPEC countries not bound by the production agreement capture all the growth in market demand in 2018.
This imbalance would potentially require OPEC to sustain production cuts to prevent further downward pressure on prices.
Increased oil production in the United States is hampering efforts to balance out market supply and demand, OPEC said on Tuesday.