Opec sees no oil price recovery on horizon

WEAKNESS in global oil markets, which has dragged prices to a three-month low, might persist as demand slows seasonally and fuel inventories remain abundant, oil producers’ cartel Opec predicted.

There were “lingering concerns” that US and European refiners might reduce processing rates as profits faded amid a continuing “overhang” of crude and refined fuels, Opec said in its monthly report.

Petrol consumption would taper off in the US with the end of the summer-vacation driving season, it said.

“With the end of the driving season in the third quarter, (petrol) demand could see a seasonal downward correction,” the organisation’s Vienna-based research department said.

High inventories of heating oil and diesel fuel around the world meant “the supply side could also continue exerting pressure”, it said.

Oil’s recovery from the 12year lows reached in January sputtered out in early June amid plentiful stockpiles, faltering demand growth and signs that US explorers could resume drilling.

Opec, which is sticking with a strategy to maximise its market share and let prices sag, said on Monday that it would hold informal talks on the sidelines of a conference in Algiers next month.

Refining margins

Brent futures traded at $44.92 (R607.97) a barrel on the ICE Futures Europe exchange at 12.09pm in London, having sunk to $41.51 on August 2, the lowest intraday price since April 18.

“Refining margins have been weakening during the last month due to high product inventories, which were caused by the lower-than-expected increase in demand,” said Opec. The re-balancing of world markets will resume towards the end of the year. – Bloomberg