gamesindustryblog.com
gamesindustryblog.com June 24, 2017


US oil output hampering market rebalancing: OPEC

15 June 2017, 02:11 | Ignacio Smith

The IEA said in its monthly oil report Wednesday it expects non-OPEC production to grow 700,000 barrels daily this year and 1.5 million barrels next year, "which is slightly more than the expected increase in global demand".

Total OPEC production for May was 32.1 million barrels per day, an increase of about 1 percent, or 336,000 barrels per day, from the previous month.

Earlier in the session, the US Energy Information Administration (EIA) said the country's crude oil inventories fell by 1.7m barrels in the week through 9 June, well shy of analysts' expectations for a decline in the 2.7m to 3.0m-barrel range.

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.

The news prompted Jackie DeAngelis, host of CNBC's Squawk Box, to remark, "We are supposed to be in a cutting period here, so the cheating has begun; the biggest offenders are not a surprise: Libya, Iraq, Nigeria, and here in the USA there is also a projected increase".

With supplies plentiful, strong demand is needed to support the market, but there are signs of a slowdown.

Benchmark Brent crude settled 43 cents higher at $48.72 a barrel while USA light crude settled up 38 cents to $46.46 a barrel.

Oil inventories are near record highs in some parts of the world, and producers outside the OPEC deal are increasing output.

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China imported 12.5 percent more oil in the first four months of this year, but imports from Saudi Arabia rose by a paltry 2.5 percent.

Non-cartel producers led by Russian Federation partially matched the cuts.

Still, supplies outside OPEC will grow even faster, by nearly 1.5 million barrels a day, with about half the expansion coming from US crude production.

Fesharaki, an expert in the energy market and an academic warned that the world may witness a drastic fall in price of a barrel of Oil to $30 if the OPEC failed to cut production.

With regards to the prices, the ASB indicated that the OPEC Reference Basket averaged $40.76/b in 2016, down from $49.49/b in 2015 and reaching the lowest yearly average since 2004. OPEC output rose in May as Libya and Nigeria revived production halted by attacks and political crises, a report from the group showed Tuesday.

While those supply reductions should eventually succeed, progress is much slower than expected, the IEA said.

Gasoline led the drop in the oil complex Wednesday as traders fretted over weak demand and an unexpected rise in weekly supplies of the fuel during the summer driving season.



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