Published: Wed, March 14, 2018
World | By Paul Elliott

OPEC Admits Rival Oil Supply Will Outpace Global Demand Growth

OPEC Admits Rival Oil Supply Will Outpace Global Demand Growth

Last week, the American Petroleum Institute (API) reported a huge build of 5.661 million barrelsof crude oil, with a draw for gasoline that saw an inventory shed of 4.536 million barrels for the fuel. The Energy Department releases its United States inventories data later this morning.

USA crude inventories rose by 1.2 million barrels in the week to March 9, to 428 million barrels, the American Petroleum Institute said on Tuesday.

Oil demand will be supported by the strong economy, OPEC said, but warned that "the most recent trade-related developments may provide challenges to the growth momentum as global trade has been an important factor contributing to the world economy".

Production rose as well, with US output hitting 10.38 million barrels a day, a new weekly record; all-time daily output measured on a monthly basis broke a 47-year record in November.

Crude futures were up by five cents to $60.78 a barrel as of 10:50 a.m. EDT, while Brent rose 9 cents to $64.75 a barrel.

Despite this, general market conditions remain weak, and crude prices have not managed to return to their early 2018 highs of over $70 per barrel for Brent and nearly $67 a barrel for WTI.

Other shale producers such as Britain, Canada, Brazil and China are also expected to boost output, OPEC said in its monthly report. "We continue to just chop around here", said Gene McGillian, manager of market research at Tradition Energy.

Copper CMCU3 and palladium XPD= , a key component in gasoline-powered vehicles, both rose around 1 percent, which in turn encouraged a bounce in the oil price. Looking at reactions in markets, crude oil prices fell following the EIA report. OPEC trimmed its 2018 demand forecast for its own crude by 250,000 bpd to 32.61 million bpd, the fourth consecutive decline.

Distillate stockpiles, which include diesel and heating oil, fell by 4.4 million barrels, versus expectations for a 1.5 million-barrel drop, the EIA data showed.

Looking at crude oil prices today, both WTI and Brent are now trading sideways.

Restraint shown by USA producers supports Goldman Sachs Group's bullish oil view, the bank said in a report.

Support on Wednesday came from a report that US crude inventories are not rising as much as expected during the spring season that is starting, implying healthy demand.

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