Crude Oil Prices Edge Down Amid Expectations of U.S. Production Levels

Crude oil prices ticked down in Asia on Friday as energy traders awaited the release of oil services firm Baker Hughes' weekly rig count. The International Energy Agency (IEA) reported a 1.4 million barrels per day increase in global demand for crude in 2015, a rate approximately 300,000 bpd faster than previous forecasts. This expected spike in demand could help counter record global supply, which has been driven by a rise in U.S. gasoline demand and higher car sales in China. Meanwhile, OPEC supply levels edged up 50,000 bpd to 31.33 million bpd in May, as producers in Saudi Arabia, Iraq, and the United Arab Emirates continued to pump oil at record monthly rates.

Key Takeaways:

• The International Energy Agency (IEA) reported a 1.4 million barrels per day increase in global demand for crude in 2015, a rate approximately 300,000 bpd faster than previous forecasts.
• This expected spike in demand could help counter record global supply, which has been driven by a rise in U.S. gasoline demand and higher car sales in China.
• OPEC supply levels edged up 50,000 bpd to 31.33 million bpd in May, as producers in Saudi Arabia, Iraq, and the United Arab Emirates continued to pump oil at record monthly rates.
• Despite the expected increase in demand, crude prices have still been affected by a stronger dollar and improved forecasts for global demand in 2015.
• The U.S. Energy Information Administration (EIA) reported that crude stockpiles fell by 6.8 million bpd last week, amid strong demand among gasoline refineries nationwide.
• The IEA notes that short-term imbalances in the global refining industry appear to be supporting oil prices, despite a lingering supply overhang.

Statistics:

• Global demand for crude is expected to increase by 1.4 million barrels per day in 2015.
• OPEC supply levels edged up 50,000 bpd to 31.33 million bpd in May.
• U.S. rigs fell by four to 642, marking the 26th consecutive week of weekly declines.
• Crude futures are still down roughly 40% since peaking in the triple digits 12 months ago.
• Average crude prices in May moved above $60 a barrel.

Sources:

• "Oil up 0.30% on mixed demand, rigs data awaited" by ADS Securities, unattributed news release.
• International Energy Agency (IEA), "Short-term imbalances in global refining industry supporting oil prices, report says".
• U.S. Energy Information Administration (EIA), "Weekly Petroleum Status Report".