Oil Trades Near $45 as IEA Grows Less Confident on Re-balancing

(Bloomberg) 

Oil traded near $45 a barrel in New York as the International Energy Agency signaled it was less confident that global markets are re-balancing as anticipated.

Futures were little changed, erasing an earlier loss of as much as 1.1 percent. The agency boosted estimates for global demand growth but said that stockpiles don’t appear to be declining as quickly as expected as rising OPEC production threatens the rebalancing process. While U.S. crude inventories fell by 7.56 million barrels last week — the most since September — the IEA said total fuel stocks in developed countries appear to have grown in the first half.

Oil remains in a bear market on concern rising global supply will offset curbs by the Organization of Petroleum Exporting Countries and its partners including Russia. OPEC’s first assessment of world markets in 2018 suggested that its current output of 32.6 million barrels a day — swollen by a recovery in Libya and Nigeria that are exempt from the cuts — will be too high.

“Given how the rebalancing process appears to be taking its time, it will be difficult to avoid having the discussion with Libya and Nigeria of eventually capping their output, provided of course the gains in the two countries are sustained,” said Harry Tchilinguirian, head of commodity markets strategy at BNP Paribas SA in London.

To read more about the recovery in OPEC’s production in more detail, click here.

West Texas Intermediate for August delivery traded at $45.44 at 8:39 a.m. on the New York Mercantile Exchange, having earlier fallen as much as 50 cents to $44.99. Total volume traded was about 7 percent above the 100-day average. Prices gained 45 cents to $45.49 on Wednesday.

Brent for September settlement dropped 7 cents to $47.67 a barrel on the London-based ICE Futures Europe exchange. Prices advanced 22 cents, or 0.5 percent, to close at $47.74 on Wednesday. The global benchmark crude traded at a premium of $2.02 to September WTI.

U.S. crude production rose by 59,000 barrels a day to 9.4 million, climbing for a second week, according to the Energy Information Administration. Gasoline stockpiles fell by 1.65 million barrels to 235.7 million.

Oil-market news:

Three years into the biggest oil downturn in a generation, industry bosses gathered at the World Petroleum Congress in Istanbul see the recovery slipping further from view. China imported more oil than the U.S. in the first six months of the year as the world’s largest energy user boosted inbound shipments to meet growing demand from independent refiners. Libyan output climbed to 1.05 million barrels a day, according to a person with direct knowledge of the matter. It’s the highest level since 2013, according to data compiled by Bloomberg. Nigeria signaled its willingness to cap its output when it increases to 1.8 million barrels a day to support OPEC’s efforts to ease a global glut.