Oil is stable as demand balances persistent glut

By David Gaffen

Brent crude was trading at $48.79 per barrel at 10:55 a.m. HK/SIN, down.12 percent, while U.S. WTI crude futures were down 0.13 percent to $46.34 per barrel.

Meanwhile, analysts are looking to next week with anticipation as ministers monitoring an agreement to cut production from the Organization of Petroleum Exporting Countries meet to review its impact.

Weekly data from EIA shows that total USA oil production is close to 9.4 million bpd, the highest since August 2015.

Output cuts from producing countries coordinated by OPEC have been stymied by rising output from Libya and Nigeria, which are exempt.

U.S. crude stocks rose last week, adding 1.6m barrels in the week to 14 July to 497.2m barrels, industry group the American Petroleum Institute said yesterday.

Even though the news about higher OPEC production has be making more headlines in the past weeks, oil traders are said to be at ease with the situation because of the of IEA reports which say oil demand is growing faster than previously expected.

USA crude imports rose last week by 576,000 bbl/d.

USA oil production has increased by more than 10% since mid-2016 to 9,340,000 barrels a day (BPD).

"Traders are also weighing the possibility that these drawdown [in oil and gasoline stocks] will soon come to an abrupt end once refinery activity dries up in late summer for planned repairs and USA production likely climbs into autumn", Craig added.

The Energy Ministry forecasts Russian crude oil exports this year at 257 million tonnes.

Refiners in India, the world's third biggest oil consumer, are diversifying crude imports as cheaper alternatives have emerged due to a global supply glut despite OPEC and some non-OPEC producers cutting output to jack up prices. Refinery utilization rates fell by 0.5 percentage point. On December 10, 2016, 11 non-OPEC countries made a decision to jointly cut oil output by 558,000 barrels per day for six months from January 2017.

Although Ecuador's meager production is unlikely to make a huge difference in the global market, other struggling OPEC members may follow suit in defiance of Saudi Arabia. The country has been especially hard-hit due to the global fall in oil prices.

Morning trading in London saw Brent crude up 19 cents on its previous closing price at $49.03 a barrel. As the numbers were better-than-expected, oil prices turned higher with WTI climbing above the $47 mark.

Both Bonny Light and Djeno, two West African grades that have been put under force majeure, were scheduled to ship nearly 403,000 barrels per day this month, loading programs compiled by Bloomberg showed.

By October 2015, with prices well on the way to their nadir in January 2016, stocks had risen to 329 million barrels, equivalent to 32.7 days worth of combined requirements. [EIA/S] But crude stocks in industrialized nations remained high, putting a brake on the oil price rally.


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