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Oil pares gains as Opec expects output from non-members to grow

OPEC cut its forecast for demand for its own crude in 2018 by 250,000 bpd to 32.61 million bpd, marking the fourth consecutive decline

Reuters  |  London 

Oil hits highest since mid-2015, then dips

was slightly higher on Wednesday after strong Chinese factory activity, though concern over the pace of growth in U.S. output, as well as other producing nations, limited gains.

The Organization of the Petroleum Exporting Countries said in its monthly report it expects supply from non-members to grow more quickly than it had previously expected.

The group also reported the first increase in inventories across the world's most industrialised nations in eight months in January, a sign the impact of its coordinated output cuts may be slowly waning, and cut its forecast for demand for its own crude.

Brent futures were last up 2 cents at $64.66 a barrel by 1410 GMT, while U.S. Intermediate (WTI) futures were up 11 cents at $60.82 a barrel.

"The report seems to illustrate that the speed of the market rebalancing is slowing," said.

"(It suggests) the rebalancing can't go much further from here and according to the report, demand for OPEC'S oil must be 33 million barrels per day for the rest of the year to get rid of any remaining oversupply."

cut its forecast for demand for its own crude in 2018 by 250,000 bpd to 32.61 million bpd, marking the fourth consecutive decline.

Earlier in the day, got a boost from a broader investor push into commodities after Chinese data showed the world's largest importer of raw materials saw industrial production grow more than expected over the first two months of the year.

ING said the Chinese industrial output was "reinforcing that bullish narrative" across the commodities market, including oil.

The is still showing a 1 percent loss so far this week as concern grows about the ability of OPEC and its partners to counter rapid growth in U.S. crude production, which is tipped to hit a record 11 million bpd before the end of the year.

Rising U.S. output, as well as seasonally low demand, mean U.S. crude inventories rose by 1.2 million barrels in the week to March 9 to 428 million barrels, the said on Tuesday.

Seasonal demand patterns for crude and refined products mean the market may only be weeks away from a run of declines.

"We are now only two to four weeks away from when will start to draw again which should be supportive for oil prices," SEB said.

Weekly U.S. crude production figures will be published by the Information Administration (EIA) later on Wednesday. [EIA/S]


(Reporting by Henning Gloystein; Editing by and Elaine Hardcastle)

First Published: Wed, March 14 2018. 22:38 IST