API Draw Fuels Rally, Investors Set for EIA Report

  • API Draw Fuels Rally, Investors Set for EIA Report

API Draw Fuels Rally, Investors Set for EIA Report

Giving its first forecasts for 2018 in a monthly report, the Organization of the Petroleum Exporting Countries said the world will need 32.20 million barrels per day (bpd) of crude from its members next year, a fall of 60,000 bpd from this year.

OPEC wants an "orderly recovery" in oil production from Libya, Nigeria and Iran and has a flexible output target under its cuts agreement to accommodate more crude from the three member nations, the group's Secretary-General Mohammad Barkindo said.

A joint ministerial committee from OPEC and non-OPEC countries including Saudi Arabia and Russian Federation, the world's biggest oil producers, will meet on 24 July to discuss compliance with a supply-cut pact and review the rise in output from Nigeria and Libya. It has become especially important in recent months as market watchers await signs that output cuts from the world's big exporters are affecting a longstanding glut.

"US gasoline demand remains lacklustre and gasoline stocks are still above the five-year average, which will cap gains in crude and gasoline prices", said Abhishek Kumar, Senior Energy Analyst at Interfax Energy's Global Gas Analytics in London. The EIA estimates that U.S. gasoline consumption is expected to average 9,390,000 bpd in 2018-0.2% higher than previous estimates. What we are now seeing is a pullback in shale oil production that will hold back USA oil output of shale until the economics start to make more sense. According to secondary sources, which the market is looking at, Saudi Arabia's oil production in May was 9.940 million bpd.

Crude inventories fell 7.6 million barrels in the week to July 7, compared with analysts' expectations for a decrease of 2.9 million barrels. It further added that the catalyst could be further intervention by OPEC or a steady drop in USA crude stockpiles and the nation's rig count.

And the punchline: OPEC expects to oversupply global markets markets by ~900k b/d in 1Q next year, with United States shale scapegoated as the culprit for OPEC's failure to bring the market back into equilibrium: Non-OPEC supply to grow by 1.14m b/d in 2018, up from 800k b/d in 2017.

At the Multi Commodity Exchange, crude oil for delivery in July was trading higher by Rs 48 or 1.65 per cent at Rs 2,960 per barrel in a business turnover of 1,893 lots.

After the EIA report on USA oil output and Tropical storm Cindy now a distant memory, this report should not be ignored as long as the EIA confirms the data at 9.30 central time. We also saw another whopper drop in Cushing, Okla., of 2.028 million barrels.

European refineries increased their crude oil intake in June, but stocks of oil products, particularly diesel, slid, Euroilstock data showed on Tuesday.

"Even if OPEC countries cut their production further and even if this causes prices to go up for a while, US production will come to pressure the prices once again", Birol said.

US crude imports fell last week by 282,000 bpd.

International Energy Agency warned Tuesday that underinvestment in new conventional projects will lead to a supply squeeze soon after investment in conventional oilfields hit the lowest level in over 70 years.