U.S. crude stockpiles rise alongside domestic output and imports, DoE says

By David Gaffen

Brent crude oil prices dipped below $63 a barrel today as the International Energy Agency (IEA) revised its oil demand forecast down due to mild early winter temperatures and rising production from some countries.

At the time of writing, Brent crude oil prices were trading 0.54 per cent lower at $62.82 per barrel while U.S. benchmark West Texas Intermediate (WTI) prices were down 0.48 per cent at $56.49 per barrel.

The IEA's outlook pressures OPEC to keep restraining output in order to defend crude prices, which its members rely on for revenue.

West Texas Intermediate crude have both shed about $3 a barrel, or almost 5 percent, from more than two-year highs struck last week.

American crude stockpiles climbed by 1.85 million barrels last week to 459 million barrels, and production extended gains to an all-time high 9.65 million barrels a day, the Energy Information Administration said yesterday.

With slowing energy demand growth in China, India will account for nearly one-third of global growth by 2040, according to the latest World Energy Outlook (WEO) of the International Energy Agency (IEA).

The scenario will see demand grow from 95.4 million barrels per day, in 2016, to reach 111.1 million barrels per day by 2040, with the global economy growing by an average of 3.5 per cent per year during that time.

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"The oil market faces a hard challenge in 1Q18 with supply expected to exceed demand by 600,000 bpd followed by another, smaller, surplus of 200,000 bpd in 2Q18", the agency said.

IEA executive director Fatih Birol said "the US becomes the undisputed leader for oil and gas production for decades, which represents a major upheaval for global market dynamics".

Meanwhile, Russia believes it's too early to announce a possible extension to output cuts at the group's producer meeting, according to two people with knowledge of the matter.

Oil rallied above $57 a barrel to a two-year high last week on escalating tensions in the Middle East and amid signals of a potential extension of supply curbs by the Organization of Petroleum Exporting Countries and allies.

The United States will look set to establish itself as the “undisputed leader” in crude and gas production by 2040 thanks to surging growth in shale oil, which has proved more resilient to the low-price environment than most market observers expected, the IEA said.

The deal expires in March 2018 but Opec will meet on November 30 to discuss policy, and it is expected to agree an extension of the cuts.

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