Oil prices rose on Tuesday with technical support for U.S. crude and despite a weaker demand outlook from the International Energy Agency (IEA) which is expected to keep the world oil market oversupplied for at least another year.
Brent futures for November delivery rose 38 cents to $50.24 a barrel, a 0.8 percent gain, by 11:13 a.m EDT (1513 GMT). U.S. crude rose 99 cents or 2.1 percent to $48.09 per barrel.
* After a relatively stable month in September, crude oil price benchmarks rallied in early October on expectations of lower US output and rising tension in the Middle East. At the time of writing, ICE Brent was trading at $51.90/bbl with NYMEX WTI lower at $48.80/bbl.
* Global demand growth is expected to slow from its five-year high of 1.8 mb/d in 2015 to 1.2 mb/d in 2016 – closer towards its long-term trend as previous price support is likely to wane. Recent downgrades to the macro-economic outlook are also filtering through.
* World oil supply held steady near 96.6 mb/d in September, as lower non-OPEC production was offset by a slight increase in OPEC crude. Non-OPEC accounted for just under 40% of the 1.8 mb/d annual increase in total oil output. Lower oil prices and steep spending curbs are expected to cut non-OPEC output by nearly 0.5 mb/d in 2016.
* OPEC crude supply rose by 90 kb/d in September to 31.72 mb/d as record Iraqi output more than offset a dip in Saudi supply. A slowdown in forecast demand growth and slightly higher non-OPEC supply lowers the 2016 ‘call’ on OPEC by 0.2 mb/d from last month’s Report to 31.1 mb/d.
* OECD commercial inventories extended recent gains and rose by 28.8 mb in August to stand at 2 943 mb by end-month. Since this was nearly double the 15.0 mb five-year average build for the month, inventories’ surplus to average levels widened to 204 mb.
* The onset of seasonal turnarounds in the OECD and the FSU is estimated to have curbed global refinery runs by 1.9 mb/d in September to 79.4 mb/d. Runs remained remarkably strong, particularly in Asia and the Middle East, leaving global throughputs up nearly 2 mb/d on a year ago.