For the first time in one month, crude oil prices rose from below $43 a barrel to $47.38 a barrel yesterday, despite a speculation that crude oil demand would reduce further.
Brent crude, the global oil benchmark, rose by 0.9 per cent to $47.38 a barrel on London’s ICE Futures exchange. On the New York Mercantile Exchange, West Texas
Intermediate futures were trading up 0.8 per cent at $44.86 a barrel.
Crude oil prices had eased to around $45 per barrel in August as a global supply overhang weighed and demand growth weakened. Brent crude had threatened to break below $40 per barrel at the end of July.
Meanwhile, the International Energy Administration (IEA) said in its August report that global oil demand growth is expected to slow from 1.4 mbpd (million barrels per day) in 2016 to 1.2 mbpd in 2017, as underlying support from low oil prices wanes.
It expects global oil supply to rise by about 0.8 mbpd in July, as both Organisation of the Petroleum Exporting Countries (OPEC) and non-OPEC production increased.
“Output was 215 kbpd lower than a year earlier, as declines from non-OPEC more than offset an 840 kbpd yearly gain in total OPEC liquids. Non-OPEC production is forecast to drop by 0.9 mbpd this year before rebounding by 0.3 mbpd in 2017,” it added.
According to IEA, OPEC crude oil output rose by 150 kbpd to 33.39 mbpd in July as Saudi Arabia pushed output to the highest ever and Iraq pumped more.
It noted that robust Middle East production lifted total OPEC crude supply 680 kbpd above a year ago and held output at an eight-year high.
The report disclosed that global refinery throughput in the third quarter is expected to rise by 2.2 mbpd from a weak second quarter to a record 80.6 mbpd. “At only 0.6 mbpd above a year earlier, third quarter runs will lag expected demand growth, eroding some of the product stock cushion built up since mid-2015. Runs are forecast to decline seasonally to below 80 mbpd in the fourth quarter of 2016,” it added.
An OECD inventory overhang continued to shift from crude into products during June, with commercial stocks swelling by 5.7 mb to a record 3 093 mb. Declines in crude oil holdings were offset by an above average product build of 15.9 mb, with big volumes of US propane and other NGLs moving into storage.