Oil slips as OPEC, IEA data un­der­scores crude glut

Kuwait Times - - BUSINESS -

LON­DON: Oil prices slipped yes­ter­day as the mar­ket re­fo­cused on a per­sis­tent sup­ply over­hang that is not ex­pected to abate un­less OPEC and other pro­duc­ers cut their out­put sig­nif­i­cantly. In­ter­na­tional Brent crude fu­tures traded at $45.13 per bar­rel at 1345 GMT, down 70 cents from their last close. US West Texas In­ter­me­di­ate (WTI) fu­tures were down by 84 cents, or al­most 2 per­cent, at $43.82 per bar­rel.

Crude fu­tures have wiped out gains made since the end of Septem­ber when the Or­ga­ni­za­tion of the Petroleum Ex­port­ing Coun­tries said it would agree to cut oil pro­duc­tion to shore up per­sis­tently low prices. While in­vestors were al­ways skep­ti­cal that a deal to cut or freeze oil out­put lev­els could be reached at an OPEC meet­ing on Nov. 30 and then im­ple­mented, an in­creas­ing amount of data has un­der­scored a global skew to­wards over­sup­ply.

OPEC re­ported yes­ter­day an in­crease in its out­put to an­other record high, point­ing to an even larger sur­plus on the mar­ket next year. It said it pumped 33.64 mil­lion bar­rels per day (bpd) last month, up 240,000 bpd from Septem­ber. That means the car­tel, be­set by geopo­lit­i­cal squab­bles amongst some of its 14 mem­ber states, would have to cut up to a mil­lion bpd if it makes good on its prom­ise to re­duce its out­put to be­tween 32.50 mil­lion bpd and 33.0 mil­lion bpd. Mean­while, the In­ter­na­tional En­ergy Agency (IEA) said the sup­ply over­hang could run into a third year in 2017, should OPEC fail to act. “Oil markets are in­creas­ingly re­flect­ing grow­ing con­sen­sus that the per­sis­tent over­sup­ply seen through­out 2016 will carry on into 2017,” an­a­lysts at JBC En­ergy wrote. “We would ac­tu­ally go a step fur­ther, as while 2016 has seen a sig­nif­i­cant im­prove­ment from 2015 with eas­ing over­sup­plies, 2017 will be worse again bar­ring mas­sive out­ages or OPEC ac­tion.”

In its monthly oil mar­ket re­port, the IEA said global sup­ply rose by 800,000 bpd in Oc­to­ber to 97.8 mil­lion bpd, led by record OPEC out­put and ris­ing pro­duc­tion from Nonopec mem­bers such as Rus­sia, Brazil, Canada and Kaza­khstan. Nige­ria is work­ing out new oil and gas poli­cies to at­tract more pri­vate in­vestors and boost crude pro­duc­tion by 500,000 bpd by 2020, state firm NNPC said on Thurs­day. The IEA kept its de­mand growth forecast for 2016 at 1.2 mil­lion bpd and ex­pects con­sump­tion to in­crease at the same pace next year, hav­ing slowed from a five-year peak of 1.8 mil­lion bpd in 2015. OPEC had a sim­i­lar global de­mand growth forecast for next year of 1.15 mil­lion bpd. Beyond over­sup­ply, a surg­ing dol­lar fol­low­ing the ini­tial shock of Don­ald Trump’s US pres­i­den­tial elec­tion win also put pres­sure on prices, traders said. The dol­lar was on course yes­ter­day for its strong­est week in a year.

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