Oil eases on oversupply as calls for producer talks draw scepticism

Oil eases on oversupply as calls for producer talks draw scepticism

Cheryl Sanders
August 11, 2016

Sliding oil prices continue to plague global economies.

The latest set of weekly figures from the Energy Information Administration´s revealed a build of 1.1m barrels in U.S. commercial crude inventories, against a forecast for a 1.75m-barrel fall from analysts at S&P Global Platts.

Worldwide benchmark Brent crude futures were down 13 cents at $44.85 per barrel at 1216 GMT.

S&P Global Platts surveys suggest that China's crude imports in 2016 will average 7.4 MMbpd (million barrels per day), 10% higher than 6.7 MMbpd in 2015 due to demand from teapot refineries. Brent crude futures LCOc1 rose 36 cents, or almost 1 percent, to $45.34.

Analysts said trading sentiment weakened after oil prices extended losses in Asia on August 10 after industry data showed a rise in U.S. crude stockpiles, supporting oversupply concerns. They include an Iran now resurgent after the end to sanctions, a Russian Federation pumping near record levels and a USA that began selling crude overseas for the first time in 40 years.

An agreement among OPEC producers to cap or reduce production could boost oil prices, which have entered a new slump after rallying earlier this year. Saudi oil production usually peaks in the summer, and it's a sign it won't curb output despite plummeting prices and will stay focused on market share. That's over a million barrels per day than it produced a year ago, and more than 2 million barrels per day produced in 2014.

The announcement was seen as a hint OPEC could take action to stabilise the crude market, amid rumours it may freeze output.

Liquid hydrocarbons on world market will decrease by 1,06 mln barrels/day and 0,3 mln barrels/day annually and as an average indicator this figure was 94,6 mln barrels/day.

Distillate stockpiles, which include diesel and heating oil, fell by 2 million barrels, versus expectations for an increase of 513,000 barrels.

OPEC president Dr Mohammed Bin Saleh Al-Sada said that since February this year, oil prices experienced a steady improvement following a decline in crude oil production, supply outages and a fall in oil inventories.

The Wall Street Journal reported Friday that Venezuela, Ecuador and Kuwait want to bring a production freeze to the table and that a deal could be reached at the forum. OPEC included Gabon, which became its 14th member on July 1, in both June and July production totals.

The agency now expects USA oil output to fall by 700,000 barrels per day this year to 8.73 million bpd, compared with the 820,000-barrels per day drop it previously forecast.

Now OPEC is projecting that the non-OPEC supply will drop by about 790,000 barrels per day in 2016, and that is a revision lower by 90,000 barrels.

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