“Prices are unable to make much headway as the market expects United States crude stockpiles to expand for the third straight week ahead of the EIA report”, said Bernard Aw, a Singapore-based market strategist at IG Markets.
USA benchmark West Texas Intermediate (WTI) for delivery in October dropped 58 cents to $46.57 a barrel from Wednesday’s close.
Oil prices slipped below $50 a barrel on Thursday after weak Japanese data sounded alarm bells over the prospects for global growth, outweighing the bullish impact of a bigger-than-expected decline in U.S. crude oil stocks. Internationally traded Brent futures were a bit weaker in comparison, gaining only 9 cents to $47.84 a barrel.
Total OPEC crude oil production in August averaged 31.54 million barrels a day, up 13,000 from July’s total.
Other sources at OPEC backed this view saying they expected oil prices to rise by no more than US$5 a barrel a year to reach US$80 by 2020, with a slowing in rival non-OPEC production growth not enough to absorb the current oil glut. The consensus of the falling crude oil inventory could support crude oil prices.
While the global Energy Agency (IEA) predicts crude stockpiles might diminish in the second half of next year as supply outside OPEC declines, Iran has vowed to boost output and increase exports once sanctions are lifted.
Crude-oil futures edged higher in Asian trade Wednesday but will likely bob sideways as the market waits to take cues from the results of the U.S. Federal Reserve’s policy meeting on Thursday. “For 2016, projections for oil demand development in China are slightly lower than anticipated in last month’s report amid expectations of slower economic activity than previously assumed”, OPEC said.
A lower USA interest rate could restrain the dollar, making dollar-denominated crude cheaper for holders of other currencies.
The report forecasts that non-OPEC supply would amount to 58.2 million barrels per day by 2017, some 1 million barrels per day lower than in the previous forecast. The OPEC estimate, however, is not almost as grim as the one issued by Goldman Sachs.