Oil is set to rise this week, 2017 demand is seen growing more than previously expected, and U.S. stockpiles are declining, yet prices are still only about $1 higher than when OPEC pledged to curb output late last year.
While the International Energy Agency raised its forecast for demand growth to the strongest in two years, it said on Thursday that the rebalancing of supply and demand has become less certain as OPEC’s output expands.
U.S. crude inventories slid the most since September last week, but the IEA said there’s little evidence that total fuel stockpiles in developed countries are shrinking as anticipated.
Futures rose 0.5 percent in New York, bringing the gain for the week to 4.7 percent. Still, oil remains in a bear market on concern rising global supply will offset cuts by the Organization of Petroleum Exporting Countries and its partners.
The group’s output climbed last month to the highest this year as members exempt from the deal -- Nigeria and Libya -- pumped more and others slipped in delivering their pledged curbs.
“The so-called re-balancing is likely to happen later than earlier,” said Michael Poulsen, an analyst at Global Risk Management Ltd.
West Texas Intermediate for August delivery was at $46.31 a barrel on the New York Mercantile Exchange, 23 cents higher than the previous day’s close at 10:10 a.m. in London. Futures closed at $45.23 on Nov. 29, the day before OPEC pledged to curb output. Total volume traded was about 14 percent below the 100-day average.
Brent for September settlement rose 26 cents to $48.68 a barrel on the London-based ICE Futures Europe exchange. Prices are up 4.2 percent this week. The global benchmark traded at a premium of $2.20 to September WTI.
The IEA increased its forecast for demand growth by about 100,000 barrels a day to 1.4 million a day. The agency’s global supply and demand estimates suggest stockpiles should have declined at a rate of 700,000 barrels a day in the second quarter, but it’s uncertain whether that actually happened. Current available data indicate that over the first half of the year inventories in developed nations actually increased by 215,000 barrels a day.
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