IEA Wobbles on Impact of OPEC Cuts, Citing Growing US Production

Global oil supply has outstripped demand over the last six months, inflating inventories and pushing crude oil's price at the end of November to its lowest in more than a year. US light crude was steady at $51.15. As a result, Azeri oil supply will decline by 0.02 mb/d to average 0.78 mb/d next year.

But worries over the strength of crude remain rife, with other market analysts pointing to $60 barrels or lower in the coming year.

Oil producers who agreed last week to trim production to boost prices will meet in April to review the impact and sign a long-term pact, the UAE minister said on Wednesday. Prices were trading at $52.15 before the supply data. Prices now hover around $60 a barrel, down from more than $85 a barrel in early October in the face of fears of weaker demand and an increase in supplies.

U.S. crude oil production decreased in the week ending December 7, the U.S. Energy Information Administration (EIA) said in a report on Wednesday.

Meanwhile, the Organisation of the Petroleum Exporting Countries (OPEC) said 2019 demand for its crude would fall to 31.44 million barrels per day, 100,000 bpd less than predicted last month and 1.53 million less than it now produces. Saudi Arabia - the de facto head of OPEC - churned out 410,000 barrels a day to a historic high of 11.06 million barrels a day.

OPEC and its partners made a decision to extend its production cuts till the end of 2018 in Vienna on November 30, as the oil cartel and its allies stepup their attempt to end a three-year supply glut that has savaged crude prices and the global energy industry.

The Libyan cutback follows last week's decision by the Organization of the Petroleum Exporting Countries and some non-OPEC producers including Russian Federation to cut supply by 1.2 million barrels per day (bpd) for six months from January 1.

In the United States, nationwide inventories declined by 10.2 million barrels in the week ended December 7, the API was said to report.

US West Texas Intermediate (WTI) crude futures were at $51.35 per barrel, up 20 cents or, 0.4 percent.

"The oil market is regaining further ground this morning in the wake of a bullish API report", Stephen Brennock of oil broker PVM said, although he sounded a note of caution.

The agency's report stands in contrast to OPEC's own monthly oil market report, which was released Wednesday and showed a slight decline in the cartel's November output despite ballooning Saudi production.

"A cut of 2.5 percent from October levels for all bar Iran, Libya, Venezuela and Qatar looks closer to a 700,000-bpd cut", said Fyfe, although he still sees the agreement as enough to support prices.

American refiners have been ramping up production since last month, with crude-processing rates rising to record levels after the seasonal maintenance period.

  • Eleanor Harrison