Crude prices sag amid doubts over OPEC's influence
- Author: Zachary Reyes Jun 21, 2017,
Jun 21, 2017, 6:15
On Wednesday, crude prices fell almost 4 percent after USA gasoline inventories rose unexpectedly and the International Energy Agency said growth in oil supply next year is expected to outpace demand even as global consumption exceeds 100 million barrels per day (bpd) for the first time.
The American Petroleum Institute published industry reports on USA energy levels, finding crude oil stockpiles increased by 2.8 million barrels and gasoline stockpiles increased by 1.8 million barrels last week.
Shale supply has pushed USA crude production up by about 10 percent over the past year to 9.3 million bpd - not far below the output of top exporter Saudi Arabia.
Inventories fell due to a rise in U.S. crude oil refinery demand to 17,256,000 bpd (barrels per day) on June 2-9, 2017.
WTI was trading up 0.8% at $46.45 per barrel at 3:11pm EST-more than $1.50 per barrel lower than a week ago-with Brent trading at $48.74, compared to $50.05 per barrel last week.
Oil has slumped despite output cuts of 1.8 million barrels a day by the Organization of the Petroleum Exporting Countries and non-OPEC producers including Russian Federation.
Oil fell yesterday after reports showed global supply was rising and U.S. crude inventories were still increasing, raising concerns the market could stay oversupplied for longer than expected.
Oil prices are more than 12 percent below where they were in late May, when producers led by the Organization of the Petroleum Exporting Countries (OPEC) extended for nine months a pledge to cut output by 1.8 million barrels per day (bpd). "It's a huge resource, it's changed everything", said Gary N Ross, global head of oil at energy analysts Pira, of U.S. shale.
The world's oil glut is likely to persist next year in a blow to efforts by major producers to shore up the oil price by cutting output, according to a leading energy authority.
The International Energy Agency stated that it expects oil supplies to be higher than demand in the next year, despite a rise in global consumption.
"For OPEC, an oversupply headache became a migraine", said Jeffrey Halley, senior market analyst at futures brokerage OANDA in Singapore.
The measures helped stabilise oil prices at the beginning of the year, with the worldwide benchmark Brent crude sticking above $50 per barrel. For drivers, this may mean more oil hauling opportunities in the future, or other heavy-duty market driving positions to become available over the course of the next few months.
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.