Daily Trends Now
Daily Trends Now


Why Did US Crude Oil Prices Hit a 7-Month Low?

The bearish inventory report added to the current negative sentiment on oil, after the International Energy Agency said Wednesday that non-Opec output was set to increase over the near term.

Crude inventories USOILC=ECI fell 1.7 million barrels in the week to June 9, compared with analysts' expectations for a decrease of 2.7 million barrels, as imports USOICI=ECI fell 481,000 barrels per day.

Brent crude oil and the U.S. light crude dropped by 30 cents to $46.70 a barrel and $44.43 per barrel respectively to their almost six-month lows, reported Reuters.

"The rebalancing of the market is underway, but at a slower pace, given the changes in fundamentals since December, especially the shift in US supply from an expected contraction to positive growth", OPEC said in the report.

Last month, OPEC and top nonproducers chose to extend their production cut to remove 1.8 million barrels per day from the market until March 2018 in an effort to push stockpiles below the five-year average.

That decline pushed both contracts to their lowest since May 5, driving them into technically oversold territory.

It also put Iran's refinery capacities growth rate per annum at 2.0 percent in 2016.




"For total non-OPEC production, we expect production to grow by 700,000 bpd this year, but our first outlook for 2018 makes sobering reading for those producers looking to restrain supply", the IEA said in its monthly oil market report.

"This is very unusual for this time of the year, when gasoline demand is supposed to pick up", said Carsten Fritsch, oil analyst at Commerzbank AG in Frankfurt, Germany. Meanwhile, gasoline stockpiles rose unexpectedly, compounding concerns about low demand for oil products amid an oversupplied market.

The IEA said in a separate report earlier on Wednesday it expected growth in non-Opec supply to outpace demand growth next year.

Increased oil production in the United States is hampering efforts to balance out market supply and demand, OPEC said on Tuesday.

Opec's pledge was to cut 1.2-million barrels per day, while other producers including Russian Federation agreed to bring the total reduction to nearly 1.8-million barrels per day.

While OPEC strains to reduce supply, it nonetheless has allowed Nigeria and Libya to increase production, and output by OPEC as a whole actually rose in May to its highest level so far in 2017, per IEA data reported by CNBC.

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