Global energy demand grew by 1 percent in 2016, a rate similar to the previous two years but well below the 10-year average of 1.8 percent, BP (BP.L) said in its benchmark Statistical Review of World Energy on Tuesday. Early indications suggest that remains the case this month, one of the sources said.
Crude oil inventory concerns have lingered, despite OPEC's curtailment on member and non-member production to the tune of 1.8 million barrels per day, and despite Saudi Arabia's ratcheting down oil exports to the United States, and promise to ratchet down more, by 35 percent in July.
The IEA says that Qatar produces almost 600, 000 barrels of crude per day with daily exports of as much as 500,000 barrels mainly to Asian states.
In its monthly assessment of the market, the agency said global crude inventories were 292m barrels higher than the five-year average. The EIA is forecast to report crude stockpiles slid 2.45 MMbbl and motor-fuel inventories dropped by 1.15 MMbbl, according to the median estimate in a Bloomberg survey. Yet the group lowered expectations for non-member Russian Federation, which has been cooperating with Saudi Arabia on production, by 200,000 bpd, or about two-thirds of the original estimate.
Brent crude oil was down 36 cents a barrel at US$48.36 by 0941 GMT. West Texas Intermediate crude futures, meanwhile, were down 3.4% to $44.92/bbl, the lowest intraday level since May 5. Russian news has reported companies have successfully cut 300,000 bpd, a deeper cut than was mandated by the OPEC deal. Last week, the API and the EIA data were at odds with each other, and the latter's report of sizeable builds in crude and gasoline, contrary to analyst expectations, alongside a shocking 505,000 b/d weekly drop in gasoline demand, dominated market sentiment, battering crude to fresh six-month lows.
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Overnight, crude futures settle higher on Tuesday as investors looked ahead to fresh US crude inventory data expected to show draw in crude stockpiles, offsetting concerns about an uptick in output from OPEC members.
Crude output from Opec nations rose by 290,000 bpd in May to a 2017 high of 32.08 million bpd, still within the confines of the supply deal, after comebacks in Libya and Nigeria, which are exempt from cuts.
Crude prices have fallen more than 10 per cent since late May, pulled down by heavy global oversupply that has persisted despite a move led by the Organization of the Petroleum Exporting Countries to curb production. In short, whenever oil demand rises and prices go up, it will be met by increased supply from the US.
With those inventories now back above 3 billion barrels, even the extended schedule of cuts announced by OPEC last month looks inadequate.