Global Oil Supply Edged Lower in August

Vladimir Smirnov  TASS

Vladimir Smirnov TASS

Oil prices were mixed on Wednesday, dampened by reports of rising US crude stockpiles but retaining some of the gains made in the previous session after OPEC said it expected higher demand for its crude next year.

Oil prices remain below $50 a barrel in NY, less than half the level traded three years ago, as the Organization of Petroleum Exporting Countries and fellow producers struggle to clear a global glut despite cutting their output for nearly nine months.

"Demand growth is strengthening: robust demand in OECD (the Organisation for Economic Co-operation and Development) countries was a key factor in 2Q17's global growth of 2.3 mb/d, the highest quarterly year-on-year increase since mid-2015".

There are signs the global oil market is returning to balance and stocks of oil products in industrialised nations could soon fall below their five-year average, the IEA said on Wednesday (Sep 13).

Non-OPEC countries have fulfilled agreement on output cut by 118% thanks to Azerbaijan and Kazakhstan, International Energy Agency (IEA) said in its report for September.

It was the first fall in global production in four months.

"Depending on the pace of recovery for the USA refining industry post-(Hurricane) Harvey, very soon OECD product stocks could fall to, or even below, the five-year level", added the IEA.

OPEC's crude output fell in August for the first time in five months on renewed turmoil in Libya, with the cartel's production decreasing by 0.21 million bpd to 32.67 million bpd. The impact of Hurricane Harvey, which struck Texas last month, on global oil markets is "likely to be relatively short-lived", the IEA said.

The 12 members of OPEC bound by a supply-cutting pact raised their compliance to 82 percent in August from 75 percent in July.

With ongoing rebalancing, the IEA raised its call on OPEC's oil by 0.1 million bpd for both 2017 and 2018.

The IEA revised down the global refinery throughput forecast for the third quarter of 2017 by 0.7 million bpd due to Harvey.

But with oil demand perking up as well as hurricanes and regular summer maintenance knocking out some production, the IEA said it has seen some of that glut disappear.