Oil market moving back into balance: IEA

With Texas producing almost three-quarters of the U.S’s supply of ethylene—considered one of the world’s most important petrochemicals—it is becoming increasingly evident that Hurricane Harvey’s effects will be felt across the nation

The price move higher also "reflects a little more confidence that the refiners are recovering", said James Williams, president of energy researcher WTRG Economics near Russellville Still, the oil market may continue to chop around as there is some lingering uncertainty as to how much crude is actually being processed by these refiners, he said.

The historic output cut deal wherein OPEC, which accounts for one-third of the global output, Russian Federation and other producers agreed to curb production by 1.8 million barrels per day until next March, is now paying off.

US crude futures CLc1 added to gains late in the session, boosted by expectations that recovering refineries will process more crude. Over the last month, crude oil imports averaged about 7.6 million barrels per day, 7.4% below the same month a year ago.

OPEC said inventories in developed economies declined by 18.7 million barrels in July to 3.002 billion barrels, 195 million barrels above the five-year average.

Oil prices rose after the report was published, with Brent crude adding 10 cents to $54.37 per barrel around 0820 GMT.

Data from the Energy Information Administration shows a build in USA crude inventories last week of 5.9 million barrels, exceeding expectations.

In the USA, refineries are set to process more crude as they come back online after Hurricane Harvey led gasoline inventories to tumble the most on record last week.

Earlier, the market received support after the oil cartel anticipated higher demand for its crude next year indicating a rebalancing of the global oil market due to its ongoing production-cutting deal.

If these weren't enough, the U.S. Energy Information Administration lowered its oil production forecast for this year and the next by 1% and 0.7%, respectively. On September 11, 2017, United States crude oil futures again moved above the 20-day moving average.

"The market is reacting in anticipation of refineries restarting at the same time expecting a decline in demand due to the after effects of Hurricanes Harvey and Irma", said Andrew Lipow of Lipow Oil Associates in Houston. The IEA said it is time to reexamine the region's energy security with the USA adding refined products to the country's strategic petroleum reserves alongside crude.

Another issue discussed in the meeting, he added, was the possibility of extending an agreement between the OPEC (Organization of the Petroleum Exporting Countries) members to reduce oil output by June 2018.

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