Global oil benchmark, Brent crude, extended its decline on Wednesday as it fell to a seven-month low after data showed an unexpectedly large weekly build in United States’ petrol inventories. The dip in oil prices came on the heels of the projection by the International Energy Agency of an increase in production from non-members of the Organisation of Petroleum Exporting Countries.
Brent, against which half of the world’s oil is measured, plunged by $1.79 to $46.93 per barrel as of 7.50pm Nigerian time, while the US benchmark, West Texas Intermediate, dropped to $44.66 per barrel, the lowest level since November 14, 2016. The IEA said it expected growth in non-OPEC supply to be higher next year than growth in overall global demand.
“For total non-OPEC production, we expect production to grow by 700,000 barrels per day this year, but our first outlook for 2018 makes sobering reading for those producers looking to restrain supply,” the IEA said in its monthly oil market report. Shale supply has pushed US crude production up by about 10 per cent over the last year to 9.3 million bpd, not far below the output of top exporter, Saudi Arabia.
“The outlook for oil hinges on the effectiveness of the OPEC cuts relative to the supply increases from US shale,” said an analyst at Australia’s Rivkin Securities, William O’Loughlin. Meanwhile, trade was thin on Wednesday, with traders eyeing a few tenders, while an oversupply of alternatives to Nigeria’s light, sweet grades continued to weigh.
Reuters reported that around 10 to 15 June loading cargoes of Nigerian crude were left with plenty available in July. Nigeria has recouped its title of biggest African crude exporter with Angola back at number two. Its July schedule is at 1.84 million bpd, slightly higher than the revised June programme that added Forcados.