Oil prices stable as strong fuel demand meets high production
SINGAPORE – Crude prices were virtually unchanged in early Asian trade on Wednesday as firm demand met strong output, with the market waiting for U.S. storage figures later in the day.
Front month U.S. crude was trading at $60.05 per barrel at 0128 GMT, up 8 cents from its last settlement.
Brent futures edged up 2 cents to $63.72 a barrel.
JP Morgan said in its weekly oil research note that U.S. production had posted a new high this week, but that it would start to drop.
“We expect that U.S. crude production will start declining sequentially from this month, which combined with robust demand data will likely result in tighter balances in 2H2015,” it said.
U.S. crude stocks are forecast to have fallen 1.7 million barrels last week, according to a Reuters poll of analysts. Gasoline stocks are expected to be down 300,000 barrels.
But most analysts say there is little room for prices to rise much further as the market remains heavily oversupplied.
U.S. Energy Information Administration (EIA) data published this month shows that global petroleum oversupply has more than doubled to a record 2.6 million barrels per day (bpd) since the end of the second quarter of last year, when one of history’s biggest oil price routs started.
Despite this, some analysts say they expect prices to rise going into the second half of the year as demand is strong and stocks are seen falling.
“Fundamentals are at an inflection point and will improve from here with high refinery runs this summer and sequentially declining U.S. crude production. As crude stocks erode, prices will gradually strengthen,” said U.S.-based Pira Energy.
PKVerleger, also from the United States, said in a note to clients that “overestimation of non-OPEC supply, when corrected, will further cut the projected glut.” – Reuters