Markets

Oil price rises as IEA forecast overshadows U.S. crude build

Oil price rises as IEA forecast overshadows U.S. crude build

Oil in NY has closed below US$50 a barrel since July as efforts to drain a global glut by the Organization of Petroleum Exporting Countries and partners including Russian Federation confront rising shale output.

"Based on recent bets made by investors, expectations are that markets are tightening and that prices will rise, albeit very modestly", the agency said.

According to an S&P Global Platts preview, EIA data could show a build of 10.1 million barrels for crude oil, but a drain on gasoline stocks of 4 million barrels. That's below the forecast for a rise of 10.1 million barrels by analysts surveyed by S&P Global Platts. This weekly drop in inventories was smaller than the drop that occurred following a previous outage of the Colonial Pipeline in September 2016, when Lower Atlantic gasoline inventories fell by almost 6 million barrels. Meanwhile, U.S. gasoline inventories tumbled the most on record last week as refineries in Texas are still recovering from Hurricane Harvey.

Just over half of all U.S. refinery capacity is located in the U.S. Gulf Coast (defined as Petroleum Administration for Defense District 3). In each case (United States, Gulf Coast, Texas, and Houston), these were the largest weekly increases in gasoline prices since Hurricane Katrina in 2005. "On the flip side, a lack of refining activity means we have seen some hefty draws to the products".

"Power plant outages were largely caused by rain or flooding affecting generator fuel supplies, outages of transmission infrastructure connecting generators to the grid, and personnel not being able to reach generating facilities", said EIA's principal contributors April Lee and Tyler Hodge.

"We don't expect a spike up in prices nor do we expect a big drop in prices".

Merkel slams Turkish travel warning, says no need to fear Germany
Turkey's travel warning is the latest in a series of several retaliatory moves made as tensions soar between Germany and Turkey. Angry protesters welcomed German Chancellor Angela Merkel to the town of Wolgast on Friday by pelting her auto with tomatoes.

The global surplus of crude and stocks over the five-year average fell to 190 million barrels.

WTI for October delivery was at $47.83/bbl on the New York Mercantile Exchange, down $0.24 cents.

The IEA report has raised its 2017 oil demand growth estimates to 1.6 million barrels per day (bpd) from 1.5 million bpd.

Zanganeh said compliance by members of the Organization of the Petroleum Exporting Countries with an agreement to curb oil output had been about 98 percent in the past eight months and would improve in the future.

"This is due to the shooting up of demand for prompt-loading barrels and amid increasing sentiment that the oil market will rebalance over the next year with a major drawdown in crude and product stocks", OPEC said in the report.


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