Oil stable as Venezuela calls for producer meeting, oversupply still weighs

OPEC also forecasts in 2016 daily demand for oil will increase by 0.09 mln barrels/day and to reach – 94,26 mln barrels/day. To do so would result in shale and other producers gaining market share in order to prop up those OPEC members that can’t compete with lower prices. Crude exports from Saudi Arabia rose just 9,900 b/d, or less than 0.2%, to 7.163 million b/d in 2015 from 7.153 million b/d the previous year, according to data from OPEC’s Annual Statistical Bulletin released in late-June.

The weekly U.S. government report revealed a build in USA crude inventories on Wednesday.

“Renewed attempts at verbal intervention by OPEC will help bolster oil market sentiment, although the group will struggle to rebuild its role as a backstop to Brent”, said oil analysts at BMI Research in a note to clients.

Riyadh said it pumped 10.67 million barrels of oil per day (bpd) in July, its biggest monthly output.

Oil prices extended losses on Wednesday after industry data showed a rise in United States crude stockpiles, supporting oversupply concerns. Demand for OPEC crude in 2016 is estimated at 31.9 million barrels a day, and in 2017, demand will rise to 33 million barrels, the organization said. On Tuesday, the EIA scaled back estimates for USA crude oil output declines for 2016.

“What’s more, the surging USA equity prices to record high levels point to improving economic conditions (the markets tend to lead the economy), which in turn implies even stronger demand for oil next year”, the analyst concluded.

Last week, crude oil inventories were up 1.4 million barrels, according to the EIA.

The EIA said gasoline stocks fell 2.8 million barrels last week in the second-biggest weekly draw for the fuel since mid-April. Aramco also recently slashed its September official selling price differentials for Asian crude buyers, as it heightens its efforts to remain price-competitive and fend off European and West African crude suppliers in the region.

On Tuesday, the EIA said in its monthly report that USA production will fall by 700,000 barrels per day this year as drilling heats up vs. a prior outlook for 820,000 barrels per day.

Saudi Arabia is one of a handful of countries that burns crude oil for electricity.

“It is likely to dampen the recovery until later this decade when a lack of project sanctioning in the last two years leads to a significant drop in offshore oil output additions towards the end of the last decade”, the report adds.