BLOOMBERG - OPEC expects its efforts to clear the surplus in oil inventories to finally succeed by the end of the third quarter of next year, said people familiar with the group's internal forecasts.
The Organization of Petroleum Exporting Countries and allies including Russia have been cutting oil production this year to bring fuel inventories in industrialized nations back in line with the five-year average. They hope to end an unprecedented build-up that sent prices plunging from above $100 a barrel in 2014 to around $50 currently, but the process has taken longer than expected and the deal has already been extended beyond its initial June expiry.
OPEC estimated that stockpiles in developed nations were still about 171 million barrels above that average in August, but expected trends in supply and demand will eliminate the surplus in about a year, the people said, asking not to be identified because the information isn't public. The forecasts assume that Libya and Nigeria's production will remain at current levels and U.S. shale output will expand by no more than 500,000 barrels a day next year, two of the people said.
Although the current production curbs are due to expire at the end of March, OPEC's estimates suggest producers will have to extend them to achieve their long-stated objective. They would need to maintain output around current levels in order to create a supply deficit next year big enough to erode stockpiles, according to Bloomberg calculations based on data published in the group's monthly market report.
OPEC and its allies will hold a meeting in Vienna on Nov. 30 where they may decide whether to prolong the measures. Russian President Vladimir Putin signaled earlier this month that he's prepared to keep the accord going until the end of next year.
OPEC's projections align with those of the Energy Information Administration, the statistical arm of the U.S. Department of Energy.
The International Energy Agency estimated in its monthly report on Thursday that the decline in inventories this year will halt in 2018 due to rising supplies from the U.S. and elsewhere. Even if stockpiles remain stable, they could continue to converge with the five-year average, which is steadily rising following years of oversupply.
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REUTERS - Brent crude futures LCOc1 were down 72 cents at $61.49 per barrel at 1020 GMT, having fallen by 1.5 percent on Tuesday, its largest one-day drop in a month. U.S. West Texas Intermediate (WTI) crude CLc1 was at $55.12 per barrel, down 58 cents.
BLOOMBERG - Prices dropped during the session as the International Energy Agency said the recent recovery in oil prices, coupled with milder-than-normal winter weather, is slowing demand growth. The worsening outlook for consumption dampened some of the enthusiasm that OPEC and its allies will extend supply curbs.
Global energy needs rise more slowly than in the past but still expand by 30% between today and 2040. This is the equivalent of adding another China and India to today’s global demand.
Product exports have grown significantly over the past several years and are expected to continue to grow as Russian refineries add capacity to produce more high-quality products.