Crude Rises for Fourth Day as Global Demand Outlook ImprovesBy
IEA says world demand climbing faster than initially expected
Agency also says little evidence that stockpiles are shrinking
Oil advanced to the highest level since July 3 on a forecast that global demand growth will accelerate this year, even as supplies drain more slowly than anticipated.
Futures rose 1.3 percent in New York, climbing for a fourth day and extending this week’s gain to 4.2 percent. The International Energy Agency raised its estimate for 2017 global demand growth by about 100,000 barrels a day to 1.4 million, the strongest in two years. Yet the agency said it needs to wait longer to confirm whether the supply-demand rebalancing process started as forecast in the second quarter.
“Demand is starting to pick up in the back end of the year and things are looking a little bit better,” Michael Loewen, a commodities strategist at Scotiabank in Toronto, said by telephone. “The market’s starting to realize that.”
Oil has traded below $50 a barrel since May amid concern that rising global supply will offset curbs by the Organization of Petroleum Exporting Countries and partners including Russia. OPEC’s first assessment of world markets in 2018 showed that the group is still pumping too much oil, even as producers reduce output. Nigeria, which is exempt from the deal, may increase production to about 2 million barrels a day this month, according to Energy Aspects Ltd.
West Texas Intermediate for August delivery advanced 59 cents to settle at $46.08 a barrel on the New York Mercantile Exchange, after declining to as low as $44.99 in intraday trading. Total volume traded was about 9 percent above the 100-day average.
Brent for September settlement added 68 cents to end the session at $48.42 a barrel on the London-based ICE Futures Europe exchange. The global benchmark crude traded at a premium of $2.17 to September WTI.
OPEC would hurt itself and help U.S. shale producers if it adopted deeper cuts, Abdullah al-Attiyah, the former oil minister of Qatar, said in interview in Istanbul.
In the U.S., data from the Energy Information Administration showed Wednesday that crude inventories fell by 7.56 million barrels last week, the biggest drop since September. U.S. crude production rose by 59,000 barrels a day to 9.4 million. The nationwide oil rig count remains at the highest level since April 2015, according to Baker Hughes Inc. data.
Investors still have concerns about how long the market will take to rebalance, said Michael Wittner, head of commodities research at Societe Generale SA in New York.
“This is what the market has been coming to grips with in the last month or two,” he said by telephone. “That’s why we are treading water in a $45-$50 range.”
- A pipeline that hauls crude oil from West Texas’ Permian Basin to Houston shut Thursday after a 1,200-barrel spill near the state capital, Austin.
- OPEC shipments will decrease to 24.23 million barrels a day in the four weeks to July 29 versus the period to July 1, tanker-tracker Oil Movements said in a weekly report.
- Nigeria signaled its willingness to cap its output when it increases to 1.8 million barrels a day to support OPEC’s efforts to ease a global glut. The producer is currently pumping 1.7 million barrels a day of crude.