Oil set for longest run of weekly losses since 2015 amid glut

The Energy Information Administration said Wednesday that gasoline inventories, one of the products that crude is refined into, unexpectedly rose by roughly 2m barrels against expectations for a decline of 457,000 barrels.

The increase in U.S. gasoline inventories drove down RBOB futures by more than 4 per cent, tugging Brent and United States crude futures lower with them, analysts said.

The bulk of new oil entering the market will come from USA shale fields, who are all taking advantage of higher oil prices that makes it more lucrative to proceed with new oil rigs and investing in shale fields.

Oil has fallen more than 16% this year, despite an agreement between the Organization of the Petroleum Exporting Countries and other major oil producers to limit production and cut down an overhang of crude in the market. In May, OPEC decided along with Russian Federation and other non-members to extend production cuts that began in January until March 2018. Demand hasn't been strong either, so "it's hard to come up with a real bullish scenario".

The market has not been able to sustain a rally since March, as efforts by the Organization of the Petroleum Exporting Countries and non-OPEC producer Russian Federation to reduce supply have been met with higher output from Nigeria and Libya, who are exempt from the deal, along with the United States.

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

The rise in US production has surprised most analysts.

July WTI oil dropped $1.73, or 3.7%, to settle at $44.73/bbl, the lowest since November.

Brent for August settlement rose 44 cents to $47.36 a barrel on the London-based ICE Futures Europe exchange.

NIGERIA's Brent crude price may increase by between $2 and $3 per barrel in the coming weeks, on the back of stable demand and low volatilities, a report by the global oil research firm S&P Global Platts, has predicted.

It added that the agency has published a forecast stating that the global refinery throughput is expected to go up by 2.7 million bpd between July and August, with refineries processing nearly 82 million bpd for the same period.

Libyan output will reach 900,000 barrels a day within days, National Oil Co. said on its website, citing Chairman Mustafa Sanalla.

"There continues to be concerns about oversupply in 2018", Bart Melek, head of global commodity strategy at TD Securities in Toronto, said by telephone.

  • Zachary Reyes