World oil market ‘adequately supplied for now’ — IEA

The price of global benchmark Brent crude has risen from around $45 a barrel in June 2017 and peaked at over $85 this month. (Reuters)
Updated 12 October 2018
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World oil market ‘adequately supplied for now’ — IEA

  • OPEC and other exporters such as Russia agreed in June to raise output as the market appeared increasingly tight
  • The outlook for world oil consumption is faltering, the IEA said

LONDON: Oil markets look “adequately supplied for now” after a big production increase in the last six months, but the industry is coming under strain, the West’s energy watchdog said on Friday.
The International Energy Agency said in its monthly report that the world’s spare oil production capacity was down to 2 percent of global demand, with further falls likely.
“This strain could be with us for some time and it will likely be accompanied by higher prices, however much we regret them and their potential negative impact on the global economy,” the Paris-based organization said.
Members of the Organization of the Petroleum Exporting Countries (OPEC) and other exporters such as Russia agreed in June to raise output as the market appeared increasingly tight.
The price of global benchmark Brent crude has risen from around $45 a barrel in June 2017 and peaked at over $85 this month on bullish bets by speculators.
OPEC, Russia and others such as US shale companies had increased production sharply since May, the IEA said, raising global output by 1.4 million barrels per day (bpd).
Overall, OPEC had boosted production by 735,000 bpd since May as Middle East Gulf producers such as Saudi Arabia and the UAE more than compensated for declining output in Venezuela and Iran, which is facing US sanctions from next month.
Supply from Iran during September dropped to a two-and-a-half year low, the IEA said, as customers continued to cut back in the run-up to new sanctions, which start on Nov 4.
Iranian output fell to 3.45 million bpd, it said, down 180,000 bpd month-on-month. Iranian oil exports in September fell to 1.63 million bpd, down 800,000 bpd from recent 2Q18 peaks, the agency estimated.
“The decline may deepen significantly ahead of US sanctions — and subsequently as final cargoes are delivered,” said the IEA, which advises major oil consumers on energy policy.
But, the outlook for world oil consumption is faltering, the IEA said as it cut its forecast of global oil demand growth by 0.11 million bpd for both this year and next to 1.28 million bpd and 1.36 million bpd respectively.
“This is due to a weaker economic outlook, trade concerns, higher oil prices,” it said.
OECD commercial stocks rose by 15.7 million barrels in August to 2.854 billion barrels, their highest level since February, on strong refinery output and liquefied petroleum gas restocking, the IEA said.
It added that OECD inventories were likely to have risen by 43 million barrels in the third quarter, the largest quarterly increase in stocks since the first quarter of 2016.
“The increase in net production from key suppliers since May of approximately 1.4 million bpd, led by Saudi Arabia, and the fact that oil stocks built by 0.5 million bpd in 2Q18 and look likely to have done the same in 3Q18, lends weight to the argument that the oil market is adequately supplied for now,” the IEA said.


Oil prices fall as US crude output hits record

Updated 14 min 52 sec ago
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Oil prices fall as US crude output hits record

  • US crude oil production reached 12 million barrels per day for the first time last week
  • As output surges, US oil stocks are also rising

SINGAPORE: Oil prices fell on Friday after the United States reported its crude output hit a record 12 million barrels per day (bpd), undermining efforts by Middle East-dominated producer club OPEC to withhold supply and tighten global markets.
International Brent crude futures were at $66.87 per barrel at 0326 GMT, down 20 cents, or 0.3 percent, from their last close.
US West Texas Intermediate (WTI) crude oil futures were at $56.84 per barrel, down 12 cents, or 0.2 percent, from their last settlement.
US crude oil production reached 12 million bpd for the first time last week, the Energy Information Administration (EIA) said on Thursday in a weekly report.
That means US crude output has soared by almost 2.5 million bpd since the start of 2018, and by a whopping 5 million bpd since 2013. America is the only country to ever reach 12 million bpd of production.
As output surges, US oil stocks are also rising.
US commercial crude oil inventories rose by 3.7 million barrels to 454.5 million barrels in the week ended Feb. 15, the EIA said.
Analysts say US output will rise further and that oil firms will export more oil to sell off surplus stocks.
“We see total US crude production hitting 13 million bpd by year-end, with 2019 averaging 12.5 million bpd,” US bank Citi said following the release of the EIA report.
Of that, the bank said, “we could be seeing some weeks with 4.6 million bpd of gross crude exports by end-year, adding to this week’s new record” of 3.6 million bpd.
Friday’s dips at least temporarily halted a rally that pushed crude prices this week to their highest for 2019 so far amid the supply cuts led by the Organization of the Petroleum Exporting Countries (OPEC).
OPEC and some non-affiliated producers such as Russia agreed late last year to cut output by 1.2 million bpd to prevent a large supply overhang from growing.
Another recent price driver has been US sanctions against oil exporters Iran and Venezuela.