IEA cuts oil demand forecasts but sees prices staying high

Oil prices: IEA, OPEC weigh in with forecasts

Western Canadian Select Crude is selling at its biggest discount on record compared with West Texas Intermediate as many Canadian oil producers fetch more than $50 US-a barrel less than American sellers.

Figures released Thursday by the U.S. Energy Information Administration revealed crude inventories climbed by six million barrels in the week leading up to October 5, compared with analyst expectations for an increase of 2.6 million barrels.

Refinery utilization rates fell by 1.6 percentage points.

Numbers crunchers said Brent was on pace for a 5 percent weekly drop, while WTI posted a 4 percent loss this week. While OPEC's Secretary-General Mohammad Barkindo tried to reassure markets that supplies are sufficient, he neglected to specify how much extra output OPEC intends to pump, an omission that's undermining efforts to calm prices. On Oct. 3, it hit a four-year high of $86.74.

The global crude market witnessed yet another volatile week.




"The long oil trade is way too overcrowded and these markets tend to overshoot their supply demand dynamics", said Phil Streible, senior market strategist at RJ O'Brien Associates.

OPEC member-states and non-OPEC oil producing nations including Russian Federation entered into an agreement on reduction of oil production (the OPEC+ agreement) in late 2016.

Wall Street extended its slide into a sixth session and a global equity index fell to a 1-year low on Thursday as investors feared an escalating USA trade war with China and risks from a recent climb in interest rates. The contract lost 2.4 percent in the previous session.

The commodities markets kept investors glued to it during the week gone by with crude oil swinging to the news reports coming out of the US, Iran and Saudi Arabia while all eyes were on the precious metals amid strong volatility in equity and currency markets.

"The increase in net production from key suppliers since May of approximately 1.4 million bpd, led by Saudi Arabia, and the fact that oil stocks built by 0.5 million bpd in 2Q18 and look likely to have done the same in 3Q18, lends weight to the argument that the oil market is adequately supplied for now", the IEA said. Analysts had expected crude inventories to increase by 2.6 million barrels. All comments are subject to editorial review.

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