European Union launches £4.4bn tax raid on tech giants
Jay Weatherill to stand down as Labor leader after SA election loss
FDA begins plan to heavily cut cigarette nicotine levels to curb addiction
Head of US Central Command signals support for Iran nuclear deal
United Air Stumbles Again as Bonus Lottery Spurs Union Backlash
Gold Plunges To 7-Month Low On Robust US Supplies
March 22 2018, 07:49 | Alonzo Simpson
Traders said the pessimism over the supply glut could put further pressure on prices, especially if inventory data doesn't show substantial progress toward rebalancing supply and demand in the next few months. This change is being driven by producers outside of OPEC, but it's the United States that is expected to be pulling most of that weight, as the IEA projects it will supply more than half of the extra 1.5 million barrels per day that non-OPEC producers will be upping their output by next year.
The IEA, a Paris-based body that advises oil-consuming states on energy matters, said in its monthly oil report it expects production in non-OPEC states like the U.S.to grow 700,000 barrels daily this year.
The recovery in the price of oil from last year's lows has, however, made it profitable once again for US shale oil companies to ramp up production.
Meanwhile, stockpiles of oil products increased, with gasoline inventories rising by 2.1 million barrels and distillates building by 300,000 barrels last week. "That doesn't happen at this time of year".
Crude stocks at the Cushing, Okla., delivery hub fell by 1.2 million bbl, EIA said. The global benchmark crude traded at a premium of US$2.07 to August WTI.
Refinery crude runs also rose 29,000 bbl/d and utilization rates rose 0.3 percentage point to 94.4% of total capacity.
Front-month gasoline futures declined 4.5 per cent to settle at US$1.4327 a gallon, the lowest since late November.
Gasoline inventories now sit at 242.4 million bbl, or 9%, above the five-year average of 223 million bbl, according to EIA data.
That is "really confirming the fact from last week that demand is a lot lower", said Tariq Zahir, managing member of Tyche Capital Advisors.
Leading players such as Saudi Arabia and Russian Federation have pledged to do "whatever it takes" to stabilize the market, and the oil revenues their economies depend on.
China's crude output in May fell 1.8 per cent from the previous month to average 3.84 million barrels a day, the lowest since October, according to Bloomberg calculations based on data yesterday from the National Bureau of Statistics.
The US, Brazil, Canada and other producers outside Opec will increase output next year by the most in four years, the IEA said in its first forecast for 2018.