Oil Higher in Wednesday Trade
NEW YORK (DTN) -- New York Mercantile Exchange spot-month oil futures climbed again Wednesday morning after the Organization of the Petroleum Exporting Countries released a bullish outlook that revises world oil demand expectations modestly higher while adjusting lower the forecast for non-OPEC supply.
In its Monthly Oil Market Report for October, OPEC raised its forecast for oil demand by 30,000 bpd versus expectations published in September projecting global crude consumption would increase 1.5 million bpd in 2017 from 2016. For 2018, OPEC sees demand rising by 1.4 million bpd, with the growth rate revised up 30,000 bpd from last month's outlook.
The OPEC report showed while world supply did increase in September, oil inventory held by the 35 countries that make up the Organization for Economic Cooperation and Development was drawn down. World oil supply in September increased 410,000 bpd from August to 96.5 million bpd, 1.08 million bpd more than September 2016.
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Citing secondary sources, OPEC showed production by its 14 members rose in September by 88,500 bpd to 32.748 million bpd, with seven member nations led by Libya, Nigeria and Iraq boosting their output. For 2017, OPEC trimmed its forecast for non-OPEC output growth rate by 100,000 bpd to 700,000 bpd, while revising 2018 non-OPEC supply growth forecast down by 60,000 bpd to 900,000 bpd.
In August, OECD commercial inventory was drawn down 6.0 million bbl to 2.996 billion bbl, with stocks 171 million bbl above their latest five-year average. The surplus is made up of 146 million bbl of crude and 25 million bbl of products stocks, the report said.
On Monday and Tuesday, OPEC Secretary General Mohammad Barkindo said OPEC members were doing a great job complying with their agreement with non-OPEC producers to cut output by 1.8 million bpd, and suggested the market is already rebalancing. His comments combined with ongoing talks to extend the production agreement by nine months through the end of 2018 boosted market sentiment.
A research note by Barclays bank this morning said the price risks are to the upside during the current fourth-quarter and first-quarter of 2018.
The market awaits the Energy Information Administration's Short-term Energy Outlook for this month due at 11 AM ET, the International Energy Agency's monthly Oil Market Report scheduled for release Thursday morning, and EIA's Weekly Petroleum Status Report for the week-ended Oct. 6 to be released late morning Thursday. The weekly data is expected to show stock draws across the board.
NYMEX November West Texas Intermediate crude oil futures climbed 13cts to $51.05 bbl, off a $51.42 one-week high. December Brent crude on the ICE platform was 7cts higher at $56.68 bbl. NYMEX November ULSD futures climbed 1.21cts to $1.7770 gallon and November RBOB futures advanced 1.67cts to $1.6082 gallon.
George Orwel can be reached at george.orwel@dtn.com
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