Oil Rises on Signs of Tightening Supply

The International Energy Agency says that global oil demand will grow at a much faster rate this year than previously estimated.

Oil prices softened on Tuesday as Hurricane Irma's dampening effect on demand offset refinery restarts in the wake of Hurricane Harvey.

The EIA also said that while refinery output declined by 3.1 million barrels per day (MMbbl/d) to an average of 14.8 MMbbl/d during the week of September 1, that reduction would be balanced by a decline in petroleum product net exports. Production among the Organization of the Petroleum Exporting Countries fell from its 2017 peak in July as the bloc took efforts to comply with its previous agreement.

Markets were upended in late August when Hurricane Harvey struck the southern coast of Texas, sidelined a good portion of total US refining capacity and threatened production centers in the Gulf of Mexico and inland shale basins.

Crude stocks at the Cushing, Oklahoma, delivery hub rose by 1 million barrels, EIA said.

Brent crude, the global oil benchmark, rose 0.5% to $54.56 a barrel on London's ICE Futures exchange.

"We believe that Irma will have a negative impact on oil demand but not on oil production or processing", Goldman Sachs analysts said in a note.

More news: A lovely weekend ahead, tracking Hurricane Irma too

Gasoline inventories declined a record 8.4 million barrels on the week with a 4.4% annual decline while distillate stocks fell 3.2 million barrels with a year-on-year decline of 11.2%. USA crude exports fell to 6.5 million bpd, the lowest since 2014, when crude export restrictions were first relaxed.

A fall in production from Saudi Arabia is bullish for crude oil (FENY) (IXC) (IYE) prices.

Oil prices rose nearly 1 percent on Tuesday after OPEC said its output fell in August and forecast higher demand in 2018, indicating its production-cutting deal with non-member countries is helping to tackle a supply glut.

Looking at oil shares in the stock markets, investors were positive.

"In 2018, non-OPEC oil supply is forecast to grow by 1.0 mb/d, following a downward revision to Russian Federation and Kazakhstan, totalling 0.1 mb/d". The cartel has never seemed less cohesive than it does in this new oil reality, where production is surging from non-conventional sources and suppliers, and prices are trading at less than half of what they were just a few years back.

Strong second-quarter demand has buoyed oil markets, which have been struggling to rebalance as a supply glut has weighed heavily on prices, the IEA said in its September report released Wednesday.

US gasoline stocks slumped 8.4 million barrels, the largest one-week decline since the EIA started recording the data in 1990, while distillate stocks fell 3.2 million barrels.

(Copyright © 2015. All Rights Reserved.)
 
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