OPEC, EIA reports offer 2018 price, supply, demand insights

OPEC Positive About Market Rebalancing Supporting Prices

OPEC Positive About Market Rebalancing Supporting Prices

"Irma will have a negative impact on oil demand but not on oil production or processing".

While Florida and the rest of the Gulf Coast deal with the aftermath of Hurricane Harvey and Irma and the energy markets assess the short-term demand destruction, in the bigger picture for energy, we are getting very bullish data in supply versus demand. Still, that's about in line with the group's production last month, meaning OPEC won't be able to reverse its current output curbs if it wants to keep world markets balanced next year. Meanwhile, demand is expected to increase by 1.6 million barrels a day, up from a July estimate of 1.5 million barrels. The American Petroleum Institute (API) will report its data on Tuesday and the U.S. Department of Energy's Energy Information Administration (EIA) reports Wednesday.

US gasoline prices fell despite a record drawdown in fuel inventories.

Brent crude oil futures for November delivery LCOc1 were down 66 cents at $53.12 a barrel while benchmark U.S. West Texas Intermediate crude CLc1 declined by 33 cents to $47.15.

OPEC and other producers, including Russian Federation, have agreed to reduce output by about 1.8 million barrels per day until next March in a bid to reduce global oil inventories and support oil prices. That's down from an August estimate of 9.91 million barrels. The IEA said this disruption would assist a speedier rebalancing between the supply and demand of oil. But that isn't how the global crude market sees it.

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We saw refinery utilization falling to the lowest since 2010 in the aftermath of Hurricane Harvey and it remains to be seen how fast the refineries can get back to normal operations.

Longer term, the United States should strengthen its energy security to address events, such as hurricanes, by potentially adding oil products to government-held inventories, the IEA said.

"While these bullish forecasts will buoy expectations for a sustained price recovery, we should caution that global oil stockpiles are expected build in the early part of next year", said Stephen Brennock, oil analyst at PVM oil, in a note.

The possibility of an extension to the 15-month production pact between members of the Organization of the Petroleum Exporting Countries and non-OPEC producers also helped to support prices, traders said.

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