United States oil falls to 3-wk low on inventory gains, Brexit fears

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17 June, 2016

Global oil markets are moving close to balance in the second half of this year on a significantly stronger than expected oil demand and unexpected supply disruptions, the International Energy Agency said Tuesday.

The agency said in its monthly report that demand growth in 2017 is likely to reach 1.3 million barrels per day (bpd), the same level at which it estimates growth for this year, having revised up its May 2016 forecast of 1.2 million bpd.

Also, in its first forecast for next year, the IEA said it expects the same rate of increased demand - 1.3 million bpd - with a relatively small increase in oil supply from producers outside of Opec, of about 200,000 bpd.

West Texas Intermediate for July delivery fell as much 77 U.S. cents to US$47.72 a barrel on the New York Mercantile Exchange and was at US$47.84 at 9.17am Tokyo time. But the impending vote on the so-called Brexit is dominating everything from currency markets to German Bunds, yields of which fell below zero for the first time on Tuesday after polls showed the "Out" campaign gaining over "In".

Looking back, "it looks as if the figure is about 800,000 bpd", the IEA report said.

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Low oil prices cut OPEC net export revenues in half a year ago, according to a new report from the U.S. Energy Information Administration.

As a result, OPEC's total crude output fell to 32.71 million barrels a day last month - from 32.83 million in April - thus helping drive a rally in oil prices since they touched a 12-year low in January.

Brent crude oil futures fell below a barrel again to.79, down 56 cents, by 0029 GMT.

KLR Group analysts also see a different outcome for non-OPEC production, predicting a roughly 600,000 barrel of oil per day decline in 2017.

However the IEA expects the second half of the year to be characterised by a series of unexpected of supply cuts in key supplier nations. Global inventories will decline by 100,000 barrels a day through the year, the IEA said. Iran, now the fastest-growing OPEC member as it restores exports curbed by worldwide sanctions, may boost output by 100,000 barrels a day next year to 3.7 million a day.


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