Oil Prices Slide On Rising Crude Inventories

Andrew Cummings
August 11, 2016

The EIA says US drivers will pay about 44 cents less per gallon for gas this summer than last summer. "Distillate fuel inventories decreased by 2.0m barrels last week but are near the upper limit of the average range for this time of year".

"Refining margins have been weakening during the last month due to high product inventories, which were caused by the lower-than-expected increase in demand", according to the report.

Oil demand growth will slow globally in 2017 as the world economy stagnates year-over-year, according to a monthly report from the Organization of the Petroleum Exporting Countries. Overall, amid rising US oil production, the prospects of production freeze talks continue to provide hope for possible improvement in prices in the coming weeks.

Currency traders watch monitors at the foreign exchange dealing room of the KEB Hana Bank headquarters in Seoul South Korea Wednesday Aug. 10 2016. Asian markets meandered on Wednesday in a post-earnings season lull as

Global benchmark Brent crude futures were down 63 cents at US$44.35 per barrel at 8.39am GMT (4.39pm Singapore time).

OPEC confirmed OPEC crude oil production achieved a historical record in July.

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.

Last night, the American Petroleum Institute (API) reported a significant increase today in its weekly United States crude inventory report of 2.09 million barrels. The drop in prices has prompted speculation OPEC may seek to revive a deal with outside producers to freeze output.

The monthly report from the Organization of the Petroleum Exporting Countries also said output from the 14-member group hit a new high last month, indicating excess global supply may persist into next year.

In its August report, OPEC forecast demand growth of 1.22 million barrels a day (mb/d) year on year, which was 30,000 barrels higher than forecast in July.

In its Short-term Energy Outlook July 2016, EIA forecast the Brent crude oil price at $43.73 and $52.15 per barrel in 2016 and 2017, respectively. Iran's output is up to 3.85 million barrels a day, Fars news agency reported, citing Oil Minister Bijan Namdar Zanganeh. Chevron (CVX) shares were down fell 1.3%, BP (BP) shares lost 1.1%, and Royal Dutch Shell (RDSA) shares dipped 0.6% to 49. The country has not expressed a readiness to talk about an output freeze.

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