London — Crude oil futures were rebounding in late morning European trading Thursday, paring some of the previous day’s falls — Brent shed 7% on Wednesday — as market participants turned their attention to the bullish US stocks data and the latest report from the International Energy Agency.
At 1035 GMT, ICE September Brent crude futures were trading at $74.59/b, up $1.19 from Wednesday’s settle, while NYMEX August WTI crude futures were 54 cents higher at $70.92/b.
US commercial distillates stocks increased by 4.1 million barrels to 121.7 million barrels for the week ended July 6, according to the latest data from the Energy information Administration, US commercial crude oil inventories fell by 12.63 million barrels for the week ended July 6, a significantly larger draw than the 6.8 million barrels reported by the API Tuesday after market close.
Moreover, the IEA has slightly reduced its overall growth outlook for non-OPEC production in 2018 to 1.97 million b/d. In its latest report published Thursday, the IEA said that while some of the current supply issues are likely to be resolved — the strike in Norway affecting the Knarr oil field, shutdown of Syncrude facility in Alberta, Canada — the large number of disruptions reminds everyone of the pressure on global oil supply.
“This will become an even bigger issue as rising production from Middle East Gulf countries and Russia, welcome though it is, comes at the expense of the world’s spare capacity cushion, which might be stretched to the limit,” IEA analysts wrote. “This vulnerability currently underpins oil prices and seems likely to continue doing so. We see no sign of higher production from elsewhere that might ease fears of market tightness,” the IEA added.
According to Commerzbank commodities analysts, even the unexpectedly sharp drop in US crude oil stocks last week was unable to halt Wednesday’s price slide, which was triggered by news that the oil terminals in the east of Libya that have been closed for four weeks will be resuming operation now that they have been returned to the recognized state oil company NOC.
“As Libyan oil supply is now expected to normalize, the market situation should ease again. That said, it remains to be seen how quickly oil exports from Libya will recover given that the ports were apparently damaged in the fighting a month ago,” Commerzbank analysts said in a daily note. “Furthermore, there are also outages in other countries at present, and Iranian oil exports are at risk of declining considerably,” they added.
However, looking at other products, the August ICE low-sulfur gasoil futures extended the previous day’s drop Thursday, trading at $648.50/mt, down $16.25 from the previous day’s settle after the EIA reported that US commercial distillates stocks increased by 4.1 million barrels to 121.7 million barrels for the week ended July 6.
–Virginie Malicier, [email protected]
–Edited by Jonathan Dart, [email protected]
Source: S&P Global Platts
