Economy

OPEC Admits Rival Oil Supply Will Outpace Global Demand Growth

OPEC Admits Rival Oil Supply Will Outpace Global Demand Growth

Crude inventories rose by 5 million barrels in the week to March 9, compared with analysts' expectations for an increase of 2 million barrels.

Both benchmarks were down on Tuesday, with the WTI benchmark down by $.81 (-1.32%) at $60.55-nearly $2 below last week's levels, while Brent traded down $0.49 (-0.75%) at $64.46 at 3:26 pm EST.

Moody's Investors Service today raised its medium-term price band for crude oil to Dollars 45-65 per barrel from USD 40-60 as continued OPEC-led production restraint and strong global demand growth have contributed to declining global inventories, offsetting rapid increases in United States shale production.

Oil prices were roughly flat on Wednesday as weekly US government data showed a larger-than-expected rise in crude stockpiles south of the border, but substantial declines in fuel inventories as refineries hiked output.

There is a split between Saudi Arabia and Iran on the ideal oil price.

Crude has struggled since hitting a three-year high in January. "So if inventories declined last week it will definitely be a positive turn", SEB commodities strategist Bjarne Schieldrop said. A broader market slump initially drove prices lower, while surging American production and increasing inventories remain a challenge.

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Brent crude futures were at US$64.74 per barrel, up 10 cents, or 0.15%.

Opec cut its forecast for demand for its own crude in 2018 by 250,000 bpd to 32.61 million bpd, marking the fourth consecutive decline. He will likely push for the U.S. to exit the nuclear deal with the Persian Gulf nation in May, and could advocate for tougher sanctions on Venezuela, which might boost oil prices, she said.

Gasoline stockpiles, however, dropped 6.3 million barrels for the week, while distillate stockpiles lost 4.4 million barrels, according to the EIA.

US production growth is still expected at 2.7 percent in 2018, up from 2.3 percent in 2017.

"The current healthy momentum in the global economy, together with the efforts undertaken by the OPEC and non-OPEC oil producing countries.is supporting the rebalancing of the oil market fundamentals", the report said.

In terms of the five-year average of OECD commercial stocks that OPEC is officially targeting in the production cut deal, preliminary data for January showed that total OECD commercial stocks were 50 million barrels above the latest five-year average, with crude stocks at a surplus of 74 million barrels and product stocks at a deficit of 24 million barrels to the seasonal norm.