IEA sees strongest global oil-demand growth in two years

IEA sees strongest global oil-demand growth in two years

US crude stockpiles rose almost twice expected levels last week as refineries cut output in the wake of Hurricane Harvey, while gasoline and distillate inventories drew, industry group the American Petroleum Institute said on Tuesday.

Oil prices edged up Tuesday, as the Organization of the Petroleum Exporting Countries (OPEC) said its output fell in August in its monthly report. Total U.S. stocks stood at 468.2 million barrels. The re-balancing of oversupplied world markets is continuing, it said, with OPEC supplies falling for the first time in five months and inventories of refined fuels in developed nations subsiding toward average levels.

Oil prices hung onto earlier gains as government data showed US crude stocks rose sharply last week.

The differential "can be explained in part by lower demand for USA crude oil in the next few weeks, as some refineries on the [Gulf Coast] will remain closed...while demand is also likely to suffer as a result of the devastation caused by Hurricane Irma in Florida", according to analysts at Commerzbank. Worldwide benchmark Brent crude fell by 35 cents to $53.49 per barrel from the previous close.

The strength of the USA dollar-which plays a role in the price of oil (a stronger US dollar drives the price of oil down)-is on a slight decline trend, EIA also said. But as refineries gear up for a return, oil prices could find support and product prices could start to see a correction.

OPEC meanwhile revised upwards its estimate for global oil demand by 1.42 million bpd to 96.77 million bpd this year. Gasoline stockpiles were down 8.4 million barrels for the week, while distillate stockpiles fell 3.2 million barrels, according to the EIA.

"Balance of Supply and Demand Based on the current global oil supply/demand balance, OPEC crude in 2017 is estimated at 32.7 mb/d, around 0.5 mb/d higher than in 2016".

Losses were capped by weekend talks between Saudi Arabia's energy minister and counterparts over a possible extension to a pact to cut global oil supplies beyond next March.

A further extension for at least three more months beyond March is now being discussed before OPEC meets again in November.



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