Oil continues decline on supply glut

Oil keeps rising on hopes of Saudi action

Brent for October settlement rose US$1.99, or 4.5 per cent, to close at US$46.04 a barrel on the London-based ICE Futures Europe exchange yesterday.

"Some momentum will be lost in 2017 due to downgrades in economic growth projections, but the forecast expansion of 1.2 million b/d is still above-trend", it said in the report.

Saudi Arabia told OPEC that it pumped a record 10.67 million barrels of oil a day in July up 123,000 barrels per day.

However, overall production fell 215,000 bpd from a year earlier, as a decline in output from non-OPEC members offset an 840,000 bpd annual gain in total OPEC liquids.

As such, crude prices continue to extend their falls on Thursday after the IEA, indeed, trimmed its oil demand forecast on next year's oil demand.

Oil prices rose sharply on Thursday after Saudi Arabia┬┤s energy minister said producers may take action to help rebalance global oil markets.

Sentiment in the oil market was not helped by news on Wednesday that Saudi Arabia reported a record 10.67 mb/d production level in the month of July.

Price levels have been supported by reports that some OPEC members could be freezing production.

U.S. West Texas Intermediate (WTI) crude stood at $43.70 a barrel, up 21 cents after touching its highest since July 25, at $44.17 per barrel.

September West Texas Intermediate crude futures leapt 4.3% or $1.78, to settle at $US43.49 a barrel in NY.

In September, The Organization of the Petroleum Exporting Countries (OPEC) will meet in hopes that Saudi Arabia will agree to freeze prices. This week's report showed a similar 2.8 million barrel withdrawal of gasoline stocks, but the news was offset by the larger than expected addition to crude oil inventories for the second week in a row, pushing oil prices lower. OPEC expects demand for its crude in 2017 to average 33.01 million bpd, suggesting a supply surplus of 100,000 bpd if OPEC keeps output steady.

"As both a consumer and a refiner of oil - the country's refineries processed 2.5 percent more crude oil than previous year in July - China is thus contributing to the tightening of the oil market", Commerzbank said.

US crude rose 2.3% to settle at $44.49 per barrel.

But the Agency pointed out that the oil market will be in balance in the current half of 2016.