International Energy Agency lifts 2017 global oil demand outlook

After first trying to keep supplies steady to keep its market share despite the oil glut, it has recently tried to cut production as Saudi's economy faces an uncertain future.

"Oil demand has been quite robust in 2Q17, particularly in the Americas and Europe", the report said.

The price of crude oil has stabilised at $54.25 as the Organisation of Petroleum Exporting Countries, OPEC, predicted increased stability of the market, yesterday. As I have written before, the IEA is notorious for underestimating demand and had to once again raise their forecast.

The two hurricanes are expected to inflict a "bearish shock" on oil balances in September, denting global demand by 900,000 barrels per day (bpd) and supply by about 300,000 bpd, Goldman said. Production rose 0.5% month-over-month but fell 2.8% year-over-year.

OPEC and non-OPEC producers, including Russian Federation, have agreed to cut output by 1.8 million barrels per day until next March in a bid to decrease global oil inventories and to support oil prices.

Meanwhile, the latest data is expected to show a build in USA commercial crude stocks - over 2 million barrels by some estimates - and a decline in gasoline inventories during the week ended September 8, continuing the pattern from the week before, when reduced refining capacity in Texas weakened domestic demand for crude and cause a draw on gasoline inventories because of lowered production. After the markets closed on Tuesday, the American Petroleum Institute reported that United States oil inventories rose by almost 6.2 million barrels in the week ended September 8.

The IEA report confirmed the same trend highlighted in OPEC's monthly report out Tuesday. For 2018, the IEA is predicting growth of 1.4 million barrels per day, or 1.4 percent. The U.S. Energy Information Administration lowered its forecast for total U.S. crude oil production, however.

Much of that was because of a near 10 million-barrel increase in stocks in the U.S. Gulf region and as crude production rebounded from a brief Harvey interruption. For the same period, analysts surveyed by The Wall Street Journal had consensus estimates for an increase of 3.7 million barrels in crude inventories, a decrease of 3 million barrels in gasoline inventories and a drop of 1.3 million barrels in distillate stockpiles. The commercial crude inventory remains in the upper half of the average range for this time of year.

  • Jon Douglas