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Crude Prices Down as IEA Report Points to Record Stockpiles
Crude oil prices fell Wednesday after surging nearly 5% overnight, as investors took profits and a bearish monthly International Energy Agency report pointed to record stockpiles. Brent crude, the global oil benchmark, fell 0.8% to $47.69 a barrel on London’s ICE Futures exchange. On the New York Mercantile Exchange, West Texas Intermediate futures were down 0.6% at $46.16 a barrel. The IEA said large inventories were threatening recent price stability as commercial stocks of oil in OECD countries reached a record 3.074 billion barrels by the end of May. “Although stocks are close to topping out, they are at such elevated levels, especially for products for which demand growth is slackening, that they remain a major dampener on oil prices,” said the report. The IEA said there is a risk that inventories could continue to rise. “The tone of the IEA report certainly is quite negative,” said Michael Hsueh, […]
OMR Highlights (13 July 2016)
- Global oil supplies rose by 0.6 mb/d in June to 96 mb/d after outages curbed OPEC and non-OPEC supplies in May. World production was 750 kb/d below last year as higher OPEC output only partially offset non-OPEC declines. Non-OPEC supplies are set to drop by 0.9 mb/d in 2016, to 56.5 mb/d, before rising 0.2 mb/d in 2017.
- Robust European demand supported 2Q16 global demand growth at around 1.4 mb/d y-o-y, momentum that will be roughly matched through the year as a whole. A modest deceleration is foreseen in 2017, as growth eases to 1.3 mb/d taking average deliveries up to 97.4 mb/d.
- Crude oil prices eased from an early June peak above $52/bbl, and traded within a $45-$50/bbl range. Growing uncertainty over the global economy and a stronger dollar weighed, but the downside was limited by further declines in US production and inventories.
- OPEC crude output rose by 400 kb/d in June to an eight-year high of 33.21 mb/d, including newly re-joined Gabon. Saudi Arabia ramped up to a near-record rate of 10.45 mb/d and Nigerian flows partially recovered from rebel attacks. Middle East producers sustained record levels, building market share and pushing OPEC’s total output 510 kb/d above a year ago.
- OECD commercial inventories built by 13.5 mb in May to end the month at a record 3 074 mb. Preliminary information for June suggests that OECD stocks added a further 0.9 mb while floating storage has continued to build, reaching its highest level since 2009.
- May global refinery throughput plunged by almost 1 mb/d from April and stood 1.5 mb/d lower year-on-year, as heavy outages took a toll in many regions. This lowered the 2Q16 estimate for global refinery intake, to 78.5 mb/d – the first y-o-y drop in three years. Our forecast for 3Q16 throughput is more steady at 80.95 mb/d.
EIA cuts 2016 U.S. oil demand growth forecast
The U.S. Energy Information Administration cut its forecast for U.S. oil demand growth in 2016, and increased its demand growth forecast for 2017, according to a monthly outlook issued on Tuesday. U.S. oil demand is expected to grow 160,000 barrels per day in 2016, compared with previous expectations for 220,000 bpd, according to the department. Demand will grow 120,000 bpd in 2017, compared with 60,000 bpd previously. U.S. petroleum and liquid fuel consumption will still reach an average of 19.68 million bpd in 2017, in line with previous estimates, said the U.S. Energy Department’s statistical wing. “EIA expects U.S. drivers will see gasoline prices gradually decline from their June level through the end of this year,” EIA Administrator Adam Sieminski […]
Venezuelan President Puts Armed Forces in Charge of New Food Supply System
Venezuela’s President Nicolás Maduro put the armed forces in charge of a new food supply system aimed at alleviating crippling shortages, ceding yet more power to a military apparatus that is already involved in everything from banking to imports. The head of the armed forces, Defense Minister Vladimir Padrino, will be in charge of transporting and distributing basic products, controlling prices and stimulating production, according to a decree published Tuesday in the official gazette. “All the ministries, all the ministers, all the state institutions are at the service and in absolute subordination” to Mr. Padrino’s so-called Great Sovereign Supply Mission, Mr. Maduro said in a televised address Monday night. Venezuelans bought groceries on Sunday in a supermarket across the border in Cúcuta, Colombia, where… The elevation of Mr. Padrino makes him among the most […]
Oil and shipping markets on edge after South China Sea ruling
Global oil and shipping markets reacted nervously on Tuesday after an international arbitration court ruled against Beijing’s claims across large swathes of the South China Sea, fuelling geopolitical tensions in the vital waterway. A tribunal in The Hague, Netherlands, found China had breached the sovereign rights of the Philippines and had no legal basis to its historic claims in the South China Sea, a major shipping lane between Europe, the Middle East and Africa. The ruling will be seen as a victory by other regional claimants such the Philippines and Vietnam, but with China rejecting the ruling and saying its military would defend its sovereign rights, nerves were on edge. Although shippers and oil traders said they did not expect an immediate impact on shipping as a result of […]
