Crude Oil Production Soared Again in July: IEA

In its monthly Oil Market Report for August released Friday morning, the International Energy Agency (IEA) said that global crude supplies rose by 520,000 barrels per day in July, the third consecutive month that output has risen.

Commercial inventories in June in Organisation for Economic Co-operation and Development (OECD) countries totaled 3.021 billion barrels, a drop of 26 million barrels from the May total. OECD stockpiles are now 219 million barrels above the five-year average, down by 19.3 million barrels from the prior month’s total. The IEA said that preliminary indications show a “further fall” in July stockpiles.

For all of 2017, total demand is now forecast at 97.6 million barrels a day, up by 1.5 million barrels a day compared to 2016. For 2018, total demand is forecast to hit 100 million barrels a day in the fourth quarter and average 99 million barrels a day for the full year. Both estimates are slightly below prior month projections.

Organization of Petroleum Exporting Countries (OPEC) crude oil production rose by 230,000 barrels a day to 32.84 million barrels in July, led by a strong recovery in Libyan production. OPEC compliance with state production cuts fell to 75%, the lowest since the cuts were initiated in January.

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The cartel and its 10 partners have achieved 87% compliance with the 1.2-million-barrel-a-day cut for the year to date. The OPEC and non-OPEC countries are currently producing about 470,000 barrels of oil a day above the agreed quota.

At the end of the second quarter of 2017, OECD commercial stocks of 3.021 million barrels have now fallen below 2016 levels. But if OECD stocks fell by 500,000 barrels a day until the end of the first quarter of next year when the current output agreements expire, stocks would still be about 60 million barrels above the five-year average.

Early Friday morning, West Texas Intermediate (WTI) crude for September delivery traded at $48.33 a barrel, down about 0.6% compared with Thursday’s closing price. Brent crude for October delivery traded down about 0.3% at $51.71 a barrel in London.

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