By Peter Nurse
Crude oil prices slumped Thursday, weighed by the combination of a surprise rise in U.S. gasoline stocks and talk that OPEC+ is nearing a deal to increase supply onto the global market.
U.S. Gasoline RBOB Futures were down 1.2% at $2.2652 a gallon.
The Energy Information Administration reported late Wednesday a seventh consecutive weekly draw in U.S. crude stockpiles. However, product inventories saw builds, with gasoline and distillate fuel oil inventories increasing, which came as a surprise during the peak driving season.
“If we look at total stocks (oil and products), inventories actually increased by 2.49MMbbls,” said ING analysts, in a note. “The data also showed a large reduction in implied demand over the week.”
Adding to the market’s woes were reports suggesting Saudi Arabia and the United Arab Emirates were close to resolving the standoff that has prevented a group of top producers, known as OPEC+, from adding the supplementary output to the global market needed to balance a tightening market.
“When talks initially broke down, this was because the UAE wanted its baseline used for production cuts increased. Reports suggest that they have got their way, with their baseline increased from around 3.2MMbbls/d to 3.65MMbbls/d,” ING added.
The International Energy Agency on Tuesday warned that the market would tighten significantly if the alliance didn’t add more barrels.
The Organization of the Petroleum Exporting Countries released its latest monthly report earlier Thursday, and expects global oil demand to reach pre-pandemic levels during 2022.
The group estimated that global oil demand would reach 99.86 million barrels a day next year, up by 3.28 million b/d from this year, and just short of the 99.97mn b/d level in 2019. That said, it also sees global oil demand exceeding the 100 million b/d mark in the second half of next year.