International Energy Agency lifts 2017 global oil demand outlook

Violet Powell
September 14, 2017

Oil slipped on September 8 by the most in more than two months amid speculation that Irma may crimp demand for gasoline and other transportation fuels.

The global oil surplus is beginning to shrink due to stronger-than-expected European and USA demand growth, as well as production declines in OPEC and non-OPEC countries, the International Energy Agency said on Wednesday.

The news caused oil prices to rise somewhat, with global benchmark Brent crude lifting 0.84 per cent to $54.29 per barrel and US West Texas Intermediate (WTI) rising 0.31 per cent to $48.22 per barrel. But market sources in North Asia say North Korea now takes about 6 million barrels/year of Chinese crude. It gradually lost strength and weakened to a tropical storm by Monday morning as it headed toward Georgia.

Crude oil prices rose on Wednesday after the International Energy Agency (IEA) said a global surplus of crude was starting to shrink, even though USA data showed another big increase in domestic inventories due to Hurricane Harvey.

According to a Reuters poll, crude stocks in the country are expected to increase following the impact of Harvey but product stockpiles may decrease.

Even so, USA crude stockpiles are likely to build in the next few weeks as refiners try to catch up with the backlog of oil stranded during the storms of the past two weeks, analysts said.

US Hurricanes Affecting Oil Prices, Saudi Could Cut Output

The inventories data was skewed as many refineries in the Gulf Coast remain offline and demand in Florida wanes in the wake of Hurricane Irma.

The latest Energy Information Administration (EIA) data recorded an inventory build of 5.9 million barrels for the week ending September 8th following a build of 4.6 million barrels the previous week. US refineries produced about 9.5 million barrels of gasoline a day last week, down about 1.1 million barrels compared to the prior week.

Refineries operated at the lowest level in nine years after Harvey, which hit the Gulf Coast on August 25, shuttered plants on the Texas Coast as well as oil production operations and ports.

"With U.S. export volumes expected to increase, the strategic importance of the Gulf Coast will only grow".

Among persistent glut worries, Saudi Arabian Energy Minister Khalid al-Falih had discussions with his Venezuelan and Kazakh counterparts about the chances of extending supply cuts through March 2018.

Opec and other producers including Russia, Mexico and Kazakhstan pledged to reduce output by about 1.8 million barrels a day to eliminate a global surplus that was weighing on prices.

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