Prices of crude oil slumped on Wednesday, as the weekly forecast of supply data is slated to be released later in the day and is expected to indicate a much bigger-than-expected increase in United States crude stockpiles despite hurricanes Harvey and Irma weighed on demand.
Output from some non-OPEC member oil producing countries, including, Kazakhstan, Mexico, Azerbaijan, Russia and in the North Sea, was also lower due to maintenance and outages - both scheduled and unexpected. "As a result, an extension of its production pact beyond the current March 2018 deadline is all but guaranteed", he added.
With the data release Tuesday, the global Brent price of oil was up 0.7% to $54.24 per barrel in recent trading, while the USA benchmark price was up 0.2% to $48.17.
In its latest Short-Term Energy Outlook, out on Tuesday, the EIA said that the effect of the supply disruptions on the Gulf Coast will last for a while, which would boost the uncertainty around oil and gas prices in the coming weeks.
US crude production rebounded to an average of 9.4 million barrels per day last week from 8.8 million bpd a week earlier, entirely the result of increases in the lower 48 states.
Consensus forecasts were for a build of 4.0 million barrels, although there was again an important element of uncertainty given the impact of hurricane Harvey which continued to cause sharp fluctuations across all metrics. In May, production increased by 366,000 barrels per day and in June, it increased by 393,000 barrels per day. A quarter of US refining capacity to be taken off-line due to the hurricane, sapping demand.
Global oil demand will climb this year by the most since 2015, the International Energy Agency said, amid stronger-than-expected consumption in Europe and the U.S. OPEC, however, raised its expectations for global crude oil demand, citing growth next year in the European and Chinese economies.
Production by the 14 members of the Organization of the Petroleum Exporting Countries came to 32.755 millions of barrels per day (bpd) last month after 32.834 in July, it said in a report, citing secondary sources.
Saudi Arabia's Energy Minister Khalid al-Falih met his Venezuelan and Kazakh counterparts at the weekend to discuss an extension of the deal by at least three months, the Saudi energy ministry said. "We expect crude prices to be stuck in somewhat of a holding pattern until we have Gulf Coast refineries brought back to full capacity".