Oil prices dip as demand stalls – IEA releases Oil Market Report for September
Oil prices dipped on Monday in Asia as weakening demand weighed on markets, although U.S. futures received some support from reduced American drilling.
Front-month Brent crude futures LCOc1 were down 37 cents at $47.77 per barrel at 0448 GMT. U.S. crude futures CLc1 dipped 7 cents to $44.56.
The U.S. oil rig count fell by 10 to 652 last week, the second straight monthly drop, and the International Energy Agency said on Friday that ongoing production cuts would lead to a rebalancing of the market by next year.
Yet several banks said the immediate outlook remained weak.
“Both the supply and demand pictures look less favourable over the coming months … Outside the U.S., oil fundamentals appear to be slipping seasonally,” Morgan Stanley said on Monday, adding that there was potential for floating storage within the second half of 2015.
Macquarie noted that falling global auto sales in August were dragging on demand.
“Sales were 1.0 percent lower YoY (year-on-year), slightly more than the 0.8 percent fall seen in July 2015,” the bank said, although it added that sales could pick up towards the end of the year.
Chinese stocks fell more than 3 percent on Monday morning as concerns over the economy offset optimism that reform among state-owned enterprises (SOEs) would accelerate.
In part due to oversupply and to defend market share, Kuwait set its October Official Selling Price for crude to Asia 60 cents lower than September, at a discount of $1.95 a barrel to Oman/Dubai levels, the biggest in a decade.
OPEC‘s monthly market report will be published later on Monday.
Cheap oil undermines the health of energy firms, which have already seen big share devaluations since prices started falling in 2014.
“The trajectory of the (oil price) recovery keeps getting shallower as our expectations for OPEC output shifts up … The financial condition of the sector deteriorates further through 2017,” Jefferies bank said.
“We are lowering our Brent oil price forecast by 9 percent to $54 per barrel (bbl) in 2015, 10 percent to $61/bbl in 2016 and 6 percent to $73/bbl in 2017,” Jefferies said.
Traders will this week eye U.S. monetary policy as the Fed on Wednesday kicks off a two-day policy meeting.
Should interest rates be raised, analysts expect oil to fall as demand is hit due to higher import prices for countries not using the dollar.
Source: Reuters – Oil prices dip as demand stalls
IEA releases Oil Market Report for September
Low price seen triggering largest cut in non-OPEC supply in more than two decades, raising “call” on OPEC in 2016
11 September 2015
The latest tumble in the price of oil, which hit a six-year low in August, is expected to cut non-OPEC supply in 2016 by nearly 0.5 million barrels per day (mb/d) – the biggest decline in more than two decades, the IEA Oil Market Report for September informed subscribers.
Lower output in the United States, Russia and North Sea is expected to drop overall non-OPEC production to 57.7 mb/d. US light tight oil, the driver of US growth, is forecast to shrink by 0.4 mb/d next year.
OPEC crude supply fell by 220 000 barrels per day (220 kb/d) in August to 31.57 mb/d, led by declines in Saudi Arabia, Iraq and Angola. The group’s output stood 1.2 mb/d higher than a year earlier. The “call” on OPEC climbs to 31.3 mb/d in 2016, up 1.6 mb/d year-on-year as lower prices dent non-OPEC supply and support above-trend demand growth.
Global oil demand growth is expected to climb to a five-year high of 1.7 mb/d in 2015, before moderating to a still above-trend 1.4 mb/d in 2016 thanks to lower oil prices and a strengthening macroeconomic backdrop.
OECD oil inventories swelled by a further 18 mb in July to a record 2 923 mb. Robust refinery throughput pushed crude stocks 9.9 mb lower, while refined products added 26.7 mb. At end-July, product stocks covered 31.2 days of forward demand, 0.6 day above end-June. Preliminary data suggest there were further builds in August.
Global refinery throughput reached a seasonal peak of 80.9 mb/d in August before the autumn turnarounds that are cutting runs through October. Refinery margins remained robust through early September, but with support shifting from gasoline to middle distillates as refiners gear up for the heating season.
The September Oil Market Report also features a detailed analysis of how the oil price rout is slamming the brakes on US light tight oil output; two other China-centered in-depth articles focus on expansion of the country’s strategic petroleum reserves and the significance of business sentiment indicators on domestic oil demand.
Source: IEA
