Oil remains below $45 amid growing concern over United States supply glut
- Author: Zachary Reyes Jun 19, 2017,
Jun 19, 2017, 10:35
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. "Oil production in the USA was. higher (and) oil tanker tracker data also suggests OPEC shipments remain strong", ANZ bank said.
But a monthly oil market report issued Tuesday by OPEC revealed that Nigeria and Libya - two members exempted from the cuts - had ramped up production, leading to a significant increase in the cartel's overall May output.
The agency continued to forecast an implied shortfall insupply relative to demand for the second quarter of this year.But it said slowing demand growth in China and Europe inparticular, as well as increasing supply, meant the deficitshould narrow to 500,000 bpd from a prior estimate of 700,000.
The Federal Reserve on Wednesday raised its benchmark interest rate for the third time in three months despite signs the US economy has cooled off in 2017. The EIA expects the figure to rise above 10 million bpd in 2018.
USA crude was down 21 cents at $44.52, after earlier touching a six-month low of $44.32 a barrel.
Oil prices fell to their lowest in over five weeks on Wednesday, following USA data showing an unexpectedly large weekly build in US gasoline inventories and International Energy Agency (IEA) data projecting an increase in non-OPEC production.
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.
It also put Iran's refinery capacities growth rate per annum at 2.0 percent in 2016.
"The industry continues to turn a crude oil surplus into a gasoline and distillate product surplus", Andrew Lipow, president of Lipow Oil Associates in Houston said.
Oil inventories have remained high several months into a deal by OPEC producers with non-member nations to reduce supply by 1.8 million bpd.
Add in Russia's tanker shipments and its total exports are likely above 9 million bpd.
Global oil output will expand faster than worldwide demand for oil next year, primarily as United States producers rack up production, and that could hamper exporters' efforts to prop up prices, the IEA said Wednesday.