Oil holds gains, buoyed by hopes for robust demand
London. Oil prices eased on Thursday, but held on to most of their gains in the previous session when the market was buoyed by a forecast for firmer global oil demand by the International Energy Agency. London Brent crude for November delivery LCOc1 was down 13 cents, or 0.2 percent, at $55.03 a barrel by 0247 GMT, after rising 1.6 percent on Wednesday.
NYMEX crude for October delivery CLc1 was down 9 cents, or 0.2 percent, at $49.21, after a 2.2 percent gain in the previous session. Wednesday’s gains came despite U.S. government data showing another big build in U.S. crude inventories due to Hurricane Harvey. The International Energy Agency raised its 2017 global oil demand growth estimate to 1.6 million barrels per day (bpd) from 1.5 million bpd.
The IEA said the global oil surplus is beginning to shrink due to stronger-than-expected European and U.S. demand growth, as well as production declines in OPEC and non-OPEC countries. The supply side of the equation is also looking promising, Barclays Research said in a note. “Unrest in Iraq and Venezuela should keep output there in check, regional crude oil contangos have dissipated, and stocks are gradually declining,” it said. That said, “a softer market balance is in store for next year, which should ensure an OPEC/non-OPEC deal remains in place beyond March 2018,” Barclays said.
The Organization of the Petroleum Exporting Countries and other producers, including Russia, are reducing crude output by about 1.8 million barrels per day (bpd) until next March in an attempt to support prices, informs Reuters. U.S. Energy Information Administration (EIA) data showed a build in U.S. crude inventories last week of 5.9 million barrels, exceeding expectations. [EIA/S]
U.S. gasoline stocks slumped by 8.4 million barrels, the largest weekly decline since data began in 1990. U.S. gasoline futures RBc1 extended declines on Thursday as demand is expected to slip due to the effects of Hurricane Irma on the high-consuming states of Florida and Georgia. Distillate stocks fell by 3.2 million barrels, the data showed. ExxonMobil Corp said on Wednesday said it was restarting its 362,300-barrel-per-day Beaumont, Texas, refinery for the first time since it was shut by Harvey.