NEW YORK (DTN) -- New York Mercantile Exchange spot-month oil futures advanced Wednesday morning after the International Energy Agency raised its global oil demand forecast and reported a supply decline in August, both globally and by the Organization of the Petroleum Exporting Countries.
In its Oil Market Report for September, Paris-based IEA, which acts as the coordinator of energy policy for Organization for Economic and Cooperation Development countries, revised global demand 100,000 barrels per day (bpd) higher for 2017 based on strong demand from the second quarter, especially in OECD countries.
Global oil demand during the second quarter surged 2.3 million bpd, or 2.4%, versus a year ago, the report said. For the year 2017, IEA raised its forecast for world consumption by 100,000 bpd to 97.7 million bpd, reflecting an annual growth rate of 1.6 million bpd.
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Global oil supply was down in August for the first time in four months, with OPEC crude oil production falling last month for the first time in five months. Global supply declined by 720,000 bpd in August to 97.7 million bpd due to unplanned outages and scheduled maintenance, mainly in non-OPEC countries, said IEA.
According to the report, compliance by the 10 non-OPEC oil producing countries that are part of the supply cut agreement topped 100% while OPEC compliance increased from 75% in July to 82% in August. OPEC production fell 210,000 bpd from a 2017 high to 32.67 million bpd in August.
Importantly, IEA suggested the OPEC goal of reducing global oil supply to their five-year average is getting closer, as commercial oil supply held by the 35 OECD countries remained flat in July at 3.016 billion barrels (bbl) at a time of year when stocks usually build. That lowered the OECD surplus versus the five-year average to 190 million bbl at the end of July.
The market now awaits EIA's weekly U.S. oil report due out at 10:30 a.m. EDT after the American Petroleum Institute's weekly oil report late Tuesday showed domestic commercial crude stocks increased by 6.8 million bbl, gasoline stocks declined by 7.9 million bbl and distillate stockpiles fell 1.8 million bpd during the week-ended Sept. 8.
At 9:00 a.m. EDT, NYMEX October West Texas Intermediate crude oil advanced 50 cents at $48.73 bbl, near a $48.77 three-day high. November Brent crude on the IntercontinentalExchange gained 39 cents to $54.66 bbl, edging off a three-day high at $54.77, with the Brent premium to WTI easing 11 cents to $5.93 bbl.
NYMEX October ULSD futures were little changed, up 0.68 cent at $1.7474 gallon. October RBOB futures were also near flat, up fractionally to $1.6567 gallon. The October RBOB contract remained near steady at a 5.53-cent premium to the November contract, indicating heightened short-term demand.
George Orwel can be reached at firstname.lastname@example.org
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